The farm lender maintained its prediction that GDP growth would slow to around one per cent.

The effective blockade of the Strait of Hormuz, which has restricted the flow of oil and gas from the region, has pushed commodity prices to multi-year highs, FCC economist Krishen Rangasamy wrote in a March 18 report.

Pros and cons

The jump in prices could spell opportunity for Canada, Rangasamy said.

WHY IT MATTERS: Higher fuel and fertilizer prices for farmers today could be followed by higher borrowing costs in the future if core inflation persists.

“Given its high historical correlation with commodity prices, nominal GDP (which matters for government revenues) is likely to also perk up.”

If commodity prices stay high, the federal government and governments in resource-rich provinces such as Alberta or Newfoundland and Labrador could see higher revenues. That doesn’t mean governments will spend more, Rangasamy said, but there’s potential for a spending-related GDP boost.

However, fertilizer prices are among those surging due to the conflict which is weighing on the ag sector. Higher prices for fuel can also push up inflation and erode consumers’ buying power.

Trade war damages

Last year, Canada’s economy saw the worst performance since the 2020 pandemic recession — growing just 1.7 per cent, Rangasamy wrote. Export volumes fell on an annual basis for the first time in five years.

Government and consumption spending offset weaknesses in housing and business investment. However, based on a slumping household savings rate, consumers also dipped into savings to maintain lifestyles. This means Canadians have little cushion to absorb future shocks.

“With no end in sight to America’s trade war … look for trade and business investment to act as a drag on Canada’s economy again in 2026,” Rangasamy said.

Government and consumption spending may not provide as much of an offset this time. Rangasamy noted the government has telegraphed caution related to public spending. While ambitious public projects are in the works, that spending isn’t expected this year.

Interest rates and the loonie

If commodity prices stay high long enough, businesses may be forced to raise prices which could lead workers to demand higher wages.

“That could potentially trigger a wage-price spiral,” said Rangasamy.

The Bank of Canada could pre-emptively raise interest rates to prevent core inflation from taking off. However, he predicted the bank would stay in “pause mode” for several months.

FCC predicted the Canadian dollar would trade in the 72- to 74-U.S. cent range for most of the year, but acknowledged currency volatility could temporarily take it outside that range.

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Excluding the effect of indirect taxes, the Consumer Price Index rose 1.9 per cent year-over-year in February, it said.

The inflation data for March will be the final month affected by the base-year effect of the sales tax break. But rising crude oil prices as a result of the Iran war are likely to change inflation expectations.

Economists polled by Reuters had expected inflation to fall to 1.9 per cent year-over-year in February from 2.3 per cent in January, and 0.7 per cent month-over-month compared with no change in the prior month.

On a monthly basis consumer prices rose by 0.5 per cent in February, StatsCan said.

Bank of Canada to decide rates Wednesday

The Bank of Canada has held its key policy rate at 2.25 per cent since October, as inflation stabilized around its two per cent target within a one to three per cent control range.

The BoC will give some indication of inflationary pressures at its policy decision on Wednesday.

“The tame (CPI) report will be welcomed by policymakers ahead of the energy price shock, as it shows that labour market slack is keeping a lid on core prices, with the issue for the BoC being how long the oil price shock lasts for and its magnitude,” Katherine Judge, senior economist at CIBC Capital Markets, wrote in a note.

Food prices ongoing pain point

Despite the base year effect, food prices in February rose by 5.4 per cent on an annual basis as food purchased at restaurants increased by 7.8 per cent last month.

Food prices have remained a major pressure point for Canadian households, as grocery prices have risen faster than overall inflation due to factors like U.S. President Donald Trump’s tariffs, bad weather conditions and supply chain issues.

Grocery prices rose 4.1 per cent in February after a 4.8 per cent rise observed in January, and the statistics agency said they have risen by 30 per cent in the last five years.

Gasoline prices decelerated by 14.2 per cent in February due to the continued impact of the removal of a carbon tax on the fuel, which reduced the year-over-year price. This impact will stay until April, StatsCan said.

Shelter costs – the largest component of the CPI basket with a weight of roughly 29 per cent – rose at a slower pace of 1.5 per cent in February as mortgage costs continued to ease. Rent costs rose 3.9 per cent on an annual basis in February.

Economists and the Bank of Canada closely watch core measures of inflation to gauge underlying price pressures.

The CPI-median, the centermost component of the CPI basket, was 2.3 per cent, while CPI-trim, which excludes the most extreme price changes, was also at 2.3 per cent.

The Canadian dollar firmed and was trading up 0.28 per cent to $1.3679 against the U.S. dollar, or 73.10 U.S. cents. Yields on two-year government bonds fell 6.5 basis points to 2.731 per cent.

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The consumer price index rose 2.3 per cent in January compared with 2.4 per cent in December, beating an analysts’ poll which pegged January’s expected rise in consumer prices at 2.4 per cent.

On a monthly basis, the CPI was unchanged from the prior month, data showed.

Gas prices decline by 16.7 per cent

The gasoline price index was the largest contributor to the deceleration in headline inflation, StatsCan said, as the yearly decline in gasoline prices was huge.

Prices at gas pumps fell on average 16.7 per cent in January, after a decline of 13.8 per cent in December. But, excluding gasoline, the CPI rose three per cent in January, matching the increase in December, the statistics agency said.

A sales tax break during the same period last year created an opposite base effect for some products such as food, alcohol and clothing. This pushed up the prices last month when compared with the same period a year ago.

Food prices rose 7.3 per cent, largely based on food from restaurants, and the category containing primarily alcoholic beverages rose 4.8 per cent in January.

Due to the choppy impacts of the sales tax break, economists usually focus on core inflation to ascertain the actual rise in consumer prices.

Excluding food and energy, the CPI rose 2.4 per cent year over year in January, following a 2.5 per cent increase in December, the agency said.

BoC calls inflation stable

The Bank of Canada’s preferred core measures of inflation continued to ease.

CPI-median, or the price change of the centermost component of the CPI basket when arranged in order of increasing prices, was 2.5 per cent compared with 2.6 per cent previously, while CPI-trim, which excludes the most extreme price changes, was 2.4 per cent, down from 2.7 per cent in December, StatsCan said.

Shelter costs, which account for the biggest weight in the CPI basket, continued to rise at a slower pace and rose 1.7 per cent last month from a year earlier.

The January data come as the Bank of Canada has indicated that it considers inflation to be stable and around the mid-point of its target range. This has helped the central bank to pause rate cuts at 2.25 per cent.

“It’s clear now that Governing Council should be squarely focused on supporting the economy,” Royce Mendes, managing director and head of macro strategy at Desjardins Group wrote in a note after the inflation numbers were released.

Money markets are now pricing in a chance of a rate cut by July, although economists are still maintaining that there could be no cuts this year as inflation stays at the central bank’s target.

The Canadian dollar was trading down 0.2 per cent to C$1.3668 to the U.S. dollar. Yields on the two-year government bonds were down 3.9 basis points to 2.439 per cent.

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The report was full of predictions that came true, as well as a few surprises. This year’s report was the 16th annual.

Food prices were driven higher in 2025 by meat, said Sylvain Charlebois, the lead of Canada’s Food Price Report. Charlebois is the Director of the Agri-Food Analytics Lab at Dalhousie University. He leads Canada’s Food Price Report, but the report was developed by a collective of scholars.

“In fact, we claimed last year that meat would be driving food inflation, and we underestimated how significantly meat prices would go up. That was really the big story in 2025,” he said.

Meat prices to stay high

Unfortunately, the group expects meat prices will remain a huge factor for 2026.

“Beef is an issue, of course, it’s been an issue for a while now, and we don’t see how the situation will normalize itself before at least mid-year 2027,” he said. “Ranchers are leaving the industry. It’s difficult for ranchers across North America.”

The high prices of beef are encouraging people to change to other types of meat, like chicken.

“We’re short on chicken because of higher beef prices. The situation with beef is really a major issue for meat counter economics in general,” he said.

Chicken raised in Canada is under supply management.

“Supply shouldn’t be a problem, but it is a problem right now, because we’re importing more chicken from abroad. But I don’t think that is going to last. I do think the chicken industry will recover eventually. It’s kind of awkward to have supply management and import more chicken from the United States right now,” he said.

Fruit and vegetable inflation down

Vegetables and fruits had their inflation rates go down in 2025 compared to 2024.

“We were expecting increases to be in the positive, but the increases didn’t accelerate as much as we expected,” he said.

The group thought the “Buy Canadian” movement and the entire American boycott would put a lot of pressure on grocers to source products that are cheaper or the same price in America.

“But we were spared, and I think that’s due to the Canadian dollar. I think the Canadian dollar remained a non-issue. That came as a surprise, I would say,” said Charlebois.

Food affordability is a top concern for consumers. A quarter of Canadian households are considered food insecure, and nearly 2.2 million people visited food banks in Canada monthly this year.

Charlebois said there are numerous factors that affect food prices including geopolitics, global weather events, policy enactment, consumer behaviour and changes in retail models. Energy costs, climate change, interest rates, labour costs, the level of consolidation in a sector, and consumer demand, including whether consumers have more money or less money to spend on food.

“These are the things that impact food prices over time. But the bottom line is that not one node of the growth of the food supply chain totally controls food prices,” he said.

Trade wars affect food prices

In 2025, food prices were affected by the trade dispute between Canada and the United States and subsequent policy changes. Consumer-led movements also altered the economic retail landscape, impacting food price inflation.

Charlebois said farmers would say there’s a weak correlation between protein prices, and retail prices, and they’re correct to say so.

“So even though there is a weak correlation between the two, production does have an impact on how food is sourced to supply grocery stores in general,” he said.

When people spend more money at the grocery store, the farmer gets a bigger proportion of the farm bill. With retail, 13 to 15 per cent of the money spent at the grocery store goes back to the farmer compared to food service, where about four per cent to five percent goes back to the farmer from food service.

“Right now, there is a strong movement towards staying retail for consumers, because they’re trying to save as much money as possible, and they’re avoiding restaurants, so that could actually be a positive for farmers in general,” said Charlebois.

Temporary foreign workers

Temporary foreign workers are widely used along the food supply chain. In 2024, Canada’s Temporary Foreign Worker Program brought in over 78,000 workers into the agricultural industry. The Canadian government is revisiting its immigration policy and has announced plans to reduce the share of temporary residents in Canada to less than five per cent of the population by 2027, to encourage more domestic labour and improve youth employment rates. Agriculture is exempt from this cap.

The current population of temporary foreign workers is at seven per cent.

There are concerns that shifts with temporary workers could lead to a major labour shortage in agriculture, disrupting the supply chain and costing businesses already operate on tight margins. The costs would be passed down to the consumer.

Charlebois said the research team is concerned about the temporary foreign worker problem.

“It’s a very important program to support our farmers,” he said. The information about temporary foreign workers was added to Canada’s Food Price Report, to send a clear signal to government that the temporary foreign worker program in agriculture should not be compromised, he said.

Food bill to rise “a lot”

The report also contains predictions for 2026.

“We’re expecting the average family (of four) to see their food bill increased by $1,000, so we’re expecting an increase of four to six per cent, so that’s a lot. I believe it’s the highest we’ve ever seen in 16 years. That’s going to be pushed by two categories; meat and the centre of the store. That’s pantry goods and dry goods. This is not going to help consumers,” he said.

“We think it’s going to push inflation higher,” he said.

The ongoing trade dispute with the United States will continue to affect prices next year. The inflationary aspects of the tariffs and counter-tariffs will continue in 2026 as trade tensions reshape the economic landscape. Canada is strengthening its relationships with other international trading partners to build resilience and competitiveness.

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The removal of a carbon levy on gasoline this year continued to depress yearly price increases for the past few months. Barring the carbon levy removal, the annual consumer price index rose by 2.7 per cent in October from 2.9 per cent in September, Statistics Canada said.

Analysts polled by Reuters had forecast the inflation to be at 2.1 per cent for October, down from 2.4 per cent in September. On a monthly basis, they forecast inflation to be 0.2 per cent.

On a monthly basis, CPI inflation was in line with forecasts, StatsCan data showed.

The Bank of Canada has cited stable inflation as one of the prime reasons to signal a halt in rate cuts last month. A further easing in October is likely to bolster its confidence to stand pat on the current policy rate of 2.25 per cent next month.

A bigger monthly decline in the price of gasoline in October brought down the annual price drop of the fuel to 9.4 per cent in October compared with a drop of 4.1 per cent in September.

Food prices rose 3.4 per cent in October

Another contributor to the slower increase in inflation was food prices, which rose 3.4 per cent in October, down from a 4.0 per cent increase in September.

Despite the deceleration, prices remained elevated and have exceeded overall inflation for nine consecutive months, StatsCan said.

Mortgage interest costs, a part of shelter inflation, increased at an annual pace of 2.9 per cent in October. This was the first time in more than three years that they came down below three per cent.

However, rent inflation, another part of shelter inflation, rose above five per cent, clocking an acceleration for two months in a row.

Due to volatility in prices and the government’s tax breaks, the BoC and economists have tracked the measures of core inflation to gauge price trends.

Canadian dollar weakens on data

One of the core measures of inflation, the CPI-median, or the centermost component of the CPI basket, was at 2.9 per cent in October, down from a downwardly revised 3.1 per cent in September.

The other core measure, CPI-trim, which excludes the most extreme price changes, edged down to 3.0 per cent in October from 3.1 per cent in September.

“It would take a longer period of easing price pressures, combined with indications of economic growth deteriorating again, to bring the Bank of Canada back off the sidelines,” Andrew Grantham, a senior economist at CIBC Capital Markets wrote in a note.

The Canadian dollar weakened a bit after the data and was trading down 0.11 per cent to 1.4035 against the U.S. dollar, or 71.25 U.S. cents. Bond yields for the two-year government bonds fell and were down 0.3 basis points to 2.475 per cent.

Price increases in October were mainly driven by cellular plans and insurance costs.

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Analysts polled by Reuters had forecast the annual inflation rate at 1.8 per cent and the monthly inflation rate at 0.3 per cent. The CPI increased by 0.3 per cent in July from 0.1 per cent in June on a monthly basis, Statistics Canada said.

Gasoline prices dropped by 16.1 per cent on a yearly basis in July, following a 13.4 per cent decline in June. On a monthly basis the price of he fuel dropped as geopolitical tensions eased and crude oil producing nations increased output.

The elimination of carbon levy on purchase of fuel has helped bring down the cost of the fuel on a yearly basis and is expected to maintain a downward pressure on the CPI basket for another eight months.

This has helped the overall consumer price index to clock a rate below the mid-point of the Bank of Canada’s one per cent to three per cent target range, even as there are signs of rising prices of food.

Excluding gasoline, the CPI rose 2.5 per cent in July, Statscan said.

The main drivers of the increase in costs were rise in food prices and shelter costs, StatsCan said. Food prices, which contributes close to 17 per cent to the overall CPI basket, rose by 3.3 per cent in July from 2.9 per cent in June.

Shelter costs, the biggest component of the CPI basket, rose three per cent in July from 2.9 per cent in June, marking the first increase since February last year. This was driven by a smaller decline in cost of natural gas and rise in rents by 5.1 per cent.

Core measures of inflation, which are closely tracked by the Bank of Canada have remained resilient and hovered around the top of the bank’s preferred range of CPI.

One of the core measures the CPI-median – or the centermost component of the CPI basket when arranged in an order of increasing prices – was at 3.1 per cent in July, from three per cent in June. The CPI-trim, which excludes the most extreme price changes, was unchanged at three per cent.

The share of the CPI basket which is above three per cent continues to be elevated at over 37 per cent, data showed.

Money markets are betting the odds of a rate cut on Sept. 17 at 32 per cent after the bank has stayed put at 2.75 per cent for its last three rate decision meetings.

The Canadian dollar weakened and was trading down 0.11 per cent after the inflation data to 1.3817 to the U.S. dollar, or 72.37 U.S. cents. Two-year government bond yields were down 0.3 basis points to 2.735 per cent.

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The consumer price index was at 1.7 per cent in the prior month.

Statistics Canada said on a monthly basis the CPI increased 0.1 per cent, matching analysts’ forecasts.

CPI has been under two per cent, or the mid-point of the Bank of Canada’s inflation target range, for three consecutive months.

This is the last major economic indicator to be released before the Bank of Canada’s rates decision later this month.

The slight rise in prices across many segments, along with a strong jobs number last week, is likely to take away any incentive to cut interest rates, economists said.

Money markets were betting on the odds for a rate cut at just over 10 per cent after the data was released. The central bank will announce its monetary policy decision on July 30.

“It’s just the latest piece of evidence to keep the Bank of Canada on hold after 83,000 jobs (added in June) and no clarity on how fiscal policy and trade policy will evolve,” said Derek Holt, vice president of Capital Market Economics at ScotiabankC.

The Canadian dollar was trading stronger by 0.19 per cent to 1.3677 against the U.S. dollar, or 73.12 U.S. cents. Yields on the government’s two-year bonds were down 0.6 basis points to 2.761 per cent.

The rise in prices in June was primarily led by a 2.7 per cent jump in durable goods such as automobiles and furniture, following a 2 per cent rise in May on a year-on-year basis, StatCan said.

Passenger vehicle prices rose 4.1 per cent on an annual basis in June following a 3.2 per cent increase in May, the agency added.

Inflation was further boosted by a rise in the price of clothing and footwear, which accelerated 2 per cent annually in June after a modest 0.5 per cent rise in May, due in part to uncertainty surrounding international trade, Statistics Canada said.

U.S. consumer prices also picked up in June, likely marking the start of a long-anticipated tariff-induced increase in inflation.

Canadian gasoline prices are expected to be depressed for the next 10 months after the government scrapped the consumer carbon levy on gasoline in April.

On a year-over-year basis gasoline prices fell by 13.4 per cent in June from 15.5 per cent in May.

Economists and the central bank have focused on the core measures of inflation, which excludes the impact of tax measures, to gauge price trends.

One of the core measures of inflation, the CPI-median, or the centermost component of the CPI basket, edged up to 3.1 per cent in June from 3.0 per cent in the prior month.

The other core measure CPI-trim, which excludes the most extreme price changes, was unchanged in June at 3.0 per cent from May, StatsCan said.

“The fact that core inflation is pretty much locked in at around three per cent is a bit of an issue for Bank of Canada rate cut prospects,” said Doug Porter, chief economist at BMO Capital Markets.

Shelter prices, which account for up to 30 per cent of the CPI basket weight and comprises mortgage and rent, rose by 2.9 per cent, the first drop below 3.0 per cent in more than four years.

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There are concerns that a raft of tariffs imposed by Trump on steel, aluminum and automobiles exported to the U.S. from Canada and subsequent counter-measures from Canada would increase prices across the board.

Those fears have not been reflected in the headline consumer price index as a tax removal on gasoline from April is expected to keep the cost at the pump down for a year. Mortgage costs and rents have also consistently eased.

Analysts surveyed by Reuters had expected annual inflation in May to be at 1.7 per cent and monthly inflation at 0.5 per cent.

StatsCan said inflation in May on a monthly basis was at 0.6 per cent, largely led by a seasonal increase in travel, accommodation and energy costs.

Gasoline prices decelerated by 15.5 per cent in May after falling by 18.1 per cent in April on an annual basis.

The cost of shelter component of the CPI, which has the biggest weight of 30 per cent in the overall basket, grew by three per cent in May, down from 3.4 per cent in April, as both mortgage interest costs and rents eased.

The Bank of Canada closely tracks core measures of inflation – CPI-trim and CPI-median – and both of them eased to three per cent, which is the upper band of the central bank’s one per cent to three per cent inflation target range.

The May and June inflation data are critical for BoC’s rates decision on July 30. If inflation continues to be low, it could tilt the bank towards a rate cut. The bank will also get April’s GDP report before its next meeting.

“This piles a lot of pressure on to the upcoming GDP report,” said Andrew Kelvin, Chief Canada Strategist at TD Securities, adding that if the economy slows materially in April, there could be a possibility of a rate cut.

After cutting rates aggressively and consistently for nine months since June last year by 225 basis points to 2.75 per cent, it has paused its rate reduction cycle at its last two meetings, especially due to the uncertainty hanging around tariffs.

Money markets are betting around a 68 per cent chance of yet another hold by the central bank of its policy rate at 2.75 per cent on July 30, when it also releases its monetary policy report.

The Canadian dollar weakened slightly after the data and was trading up 0.1 per cent to 1.3717 against the U.S. dollar, or 72.90 U.S. cents. Yields on the government’s two-year bonds were up 2.4 basis points to 2.637 per cent.

— Additional reporting by Nivedita Balu and Fergal Smith in Toronto

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The overall inflation rate fell from 2.3 per cent in March after the removal of a federal consumer carbon tax, Statistics Canada said on Tuesday.

Analysts had forecast the annual rate would ease to 1.6 per cent while the Bank of Canada last month predicted it would fall to about 1.5 per cent, mainly due to the removal of the carbon tax and lower crude prices.

Effect of tariffs difficult to predict

After seven consecutive cuts since last June the Bank held rates on April 16 while saying it would be ready to move decisively if needed to keep inflation under control.

The bank – which is due to unveil its next rate decision on June 4 – says the effect of U.S. tariffs is hard to predict, while noting the measures in place are already hurting the Canadian economy.

The bank pays particular attention to the core measures of inflation, which strip out the prices of more volatile items and do not take into account the removal of the carbon tax.

CPI median, which shows the median inflation rate across CPI components, rose from 2.8 per cent in March to 3.2 per cent in April, the highest since March 2024.

CPI trim, which excludes upside and downside outliers, edged up from 2.9 per cent to 3.1 per cent, also a 13-month high.

“Signs of renewed weakening in the economy on one hand … but stronger core inflation on the other makes for a tough decision for the Bank of Canada,” said Andrew Grantham, senior economist at CIBC Capital Markets.

Odds for rate cut dip

The odds for a rate cut dipped to 40 per cent from 65 per cent before the release, currency swap market bets showed.

Overall energy prices plunged 12.7 per cent last month from April 2024 as gasoline prices fell by 18.1 per cent from a year earlier, while year-over-year prices for natural gas dropped 14.1 per cent.

Consumers, though, paid 3.8 per cent more for groceries than they had done a year previously, up from 3.2 per cent in March. Year over year, prices for travel tours rose 6.7 per cent in April.

On a month-by-month basis, inflation dipped by 0.1 per cent compared to analysts’ forecasts of a 0.2 per cent drop.

Andrew Kelvin, head of Canadian and global rates strategy at TD Securities, said the data right now did not suggest the bank needed to cut rates.

“But obviously the significant uncertainty around trade tensions would be supportive of additional fiscal signals, so it creates a very difficult balance,” he said.

The Canadian dollar strengthened 0.1 per cent to C$1.3930 to the U.S. dollar, or 71.79 U.S. cents.

The inflation figures were the penultimate major release before the June 4 rate announcement. Statscan is due to publish first quarter GDP figures on May 30.

— Additional reporting by Fergal Smith and Nivedita Balu in Toronto

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The lower than expected number on inflation slightly increased the chances of a rate cut on Wednesday, although the majority in the market still tilted towards a pause as economists were divided on the course for monetary policy.

The core measures of inflation, which are closely tracked by the Bank of Canada and strip off volatile items, however, stayed elevated, Statistics Canada said.

“Does (the bank) look in the rear view mirror at still relatively sticky core inflation, or does it look forward knowing that the consumer and business sentiment has crumbled and the economy is likely to weaken in this quarter? That’s a tough call,” said Doug Porter, chief economist at BMO Capital Markets.

“I don’t think anyone’s going to question their wisdom if they decide to trim tomorrow,” he said.

The BoC will announce its monetary policy decision on Wednesday and currency markets have trimmed their bets for a pause in its interest rate cutting cycle to around 52 per cent from 60 per cent before the data was released.

U.S. President Donald Trump’s tariffs on a variety of Canadian imports and Canada’s retaliatory measures are expected to increase prices but also suppress economic growth, putting the central bank in a bind on whether to cut or increase rates.

On a month-on-month basis, inflation rose by 0.3 per cent, Statscan said.

Analysts polled by Reuters had expected the year-on-year inflation rate to remain at 2.6 per cent, and on a monthly basis to rise by 0.6 per cent.

The rate of increase of consumer prices in Canada has shown signs of acceleration after seven months of staying at a level of two per cent or below.

A sales tax break from mid-December to mid-February helped mask the actual price increases. This was evident in the price increase of food and alcoholic beverages, which reversed a previous contraction and jumped in March.

Food prices rose by 3.2 per cent and alcoholic beverages increased by 2.4 per cent on an annual basis.

But this increase was largely offset by a deceleration of 1.6 per cent in the price of gasoline. Without gasoline, the consumer price index rose by 2.5 per cent in March, Statscan said.

“The decline was largely a result of lower crude oil prices amid concerns of slowing global oil demand and slowing economic growth related to the threat of tariffs,” the statistics agency said.

Year over year, prices for travel tours declined 4.7 per cent in March and air travel costs fell 12.0 per cent. The drop in air travel prices coincided with decreased Canadian trips to the United States, Statscan said.

The Canadian dollar was trading down 0.28 per cent at 1.3911 to the U.S. dollar, or 71.89 U.S. cents. Yields on two-year government bonds dropped 4.2 basis points to 2.537 per cent.

One of the core measures of inflation, CPI-median – or the centermost component of the CPI basket when arranged in an order of increasing prices – was at 2.9 per cent in March, same as the prior month.

The other core measure CPI-trim, which excludes the most extreme price changes, slowed a tad to 2.8 per cent, Statscan said.

— Reporting by Promit Mukherjee and Dale Smith; Additional reporting by Fergal Smith and Anna Mehler Paperny.

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