Canada’s annual inflation rate surged to 2.8 percent in April, driven mainly by a significant increase in pump prices, as reported by Statistics Canada on Tuesday. Energy prices saw a substantial 19.2 percent year-over-year rise in April, following a 3.9 percent uptick the previous month. Gasoline costs specifically spiked by 28.6 percent year-over-year due to supply disruptions in the Strait of Hormuz and the transition to pricier summer gasoline blends.
Global energy prices escalated due to the conflicts involving the U.S., Israel, and Iran, resulting in the strait’s closure. The temporary suspension of the fuel excise tax by the federal government in mid-April helped temper the overall price hike for the month.
In March, the inflation rate surged to 2.4 percent primarily due to high energy prices. The decision by Ottawa to eliminate the consumer carbon price earlier than planned skewed the annual price comparison higher in April. This move reduced gas prices by about 18 cents per liter in April 2025.
Additionally, clothing and footwear prices increased by two percent in April after a 0.4 percent decline in March. Despite the rise in gas and energy prices, other sectors did not experience similar price hikes. Rents continued to increase but at a slower pace, with a 3.6 percent year-over-year rise nationally, down from 4.2 percent in March.
Food inflation decreased to 3.5 percent in April, compared to four percent in March, as the prices of grocery items like chicken, fresh vegetables, coffee, and tea saw slower increases following sharp spikes earlier in the year. Tour travel prices dropped by 11 percent in April after an 11.5 percent increase in the previous month.
Core inflation, which excludes volatile items like fuel and food, rose at a much slower rate than overall inflation. BMO chief economist Doug Porter mentioned that beyond the impact on gasoline prices, the overall inflation report appeared subdued. The softness in core inflation might provide relief to other sectors, potentially preventing a significant rise in inflation even as gas prices affect various industries.