Inflation cooled to 2.3% in March as gas prices fell, StatCan says

Jimmy Jean, vice-president, chief economist and strategist at Desjardins, discusses the Bank of Canada's path forward as inflation comes in below estimates.

Canadians got a break on inflation in March as gas prices fell and a slowdown in travel to the United States helped cool airfare costs, Statistics Canada said Tuesday.

The annual rate of inflation slowed to 2.3 per cent last month, down from 2.6 per cent in February. A poll provided by LSEG Data & Analytics ahead of Tuesday’s release had expected yearly inflation to hold steady month-to-month.

StatCan said gas prices fell 1.6 per cent year-over-year in March, coming off a hike of 5.1 per cent in February.

The agency also pointed to a drop of 4.7 per cent annually in prices for travel tours last month following a sizeable jump over the long weekend in February.

Airfare costs were down 12 per cent year-over-year in March, StatCan said, and rose only slightly month-to-month.

StatCan said the cooling in flight costs came as fewer Canadians traveled to the United States last month, when many families typically get away for March break.

March marked the beginning of the United States’ tariff war with Canada, which has prompted some consumer backlash toward U.S. travel and products in recent weeks.

Cellular prices were also down 6.8 per cent in March from a month earlier, which StatCan said was a result of lower costs for cell plans and industry-wide promotions.

Limiting the overall slowdown in inflation was the end of the federal government’s temporary tax holiday in mid-February.

March was the first full month without the federal sales tax relief on a variety of household staples and dining out, which StatCan said provided some lift in the inflation figures compared with February.

Restaurant prices, for instance, rose 3.2 per cent annually in March following a 1.4 per cent decline in February.

The March inflation data comes a day before the Bank of Canada is expected to make its next interest rate decision on Wednesday.

The central bank cut its benchmark rate by a quarter point to 2.75 per cent last month.

This report by The Canadian Press was first published April 15, 2025.