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Core Inflation Cools

The Conference Board of Canada

Core Inflation Cools 

Ottawa,May15, 2019—The Conference Board of Canada’s Principal Economist Alicia Macdonald offers the following insights on today's consumer price index data: 

“Total inflation hit 2.0 per cent in April while core inflation growth decelerated to a 1.9 per cent pace, reflecting weaker economic growth. Excess supply is expected to linger in the economy through 2020 keeping inflation in check. As a result, the Bank of Canada will be in no rush to lift interest rates.”  


·       After increasing by 1.9 per cent in March, inflation inched up to 2.0 per cent in April.  

·       As we saw last month, one of the primary drivers of faster price growth was an increase in gasoline prices, which were up 10 per cent monthly due to factors such as the introduction of, or increase in, carbon prices in some provinces, higher global oil prices and the switch to summer-blend gasoline. 

·       Despite the monthly increase, gasoline prices are still down on a year-over-year basis. Inflation, excluding gasoline, was up 2.3 per cent last month compared to 2.2 per cent growth in March. 

·       While price growth was broad based—seven of eight of the major aggregates showed price growth over the past year—growth was strongest in food and shelter costs reflecting higher prices for fresh vegetables (up 14.5 per cent) and mortgage interest costs (up 8.2 per cent). 

·       After hitting 2.0 per cent in March, the average of the Bank of Canada’s core inflation measures decelerated to a 1.9 per cent pace in April as CPI-trim and CPI-median posted softer growth while CPI-common held steady at 1.8 per cent. 

·       With our latest forecast suggesting that the economy will be slow to absorb its current excess capacity, inflation pressures will remain muted. As such, the Bank of Canada is expected to remain on hold into 2020 as it evaluates how quickly the economy will emerge from its current soft patch.  

Content Attribution: 

Alicia Macdonald 
Principal Economist 
The Conference Board of Canada 


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