Canada’s inflation rate falls to 2.7% in April as price growth slows across economy

Canada’s annual inflation rate fell to 2.7% in April amid a broad-based deceleration in price growth, Statistics Canada reported Tuesday (May 21).

The agency says the slowdown from 2.9% in March was led by food prices, services and durable goods.

Tuesday’s consumer price index report bears good news for the Bank of Canada, which has been looking for a sustained decline in inflation toward its 2%.

The latest inflation figures are expected to play a key role in the central bank’s interest rate decision scheduled for June 5 as it weighs recent economic data.

Grocery prices grew at a modest pace, rising 1.4% from a year ago, the data showed.

Meanwhile, higher gasoline prices moderated the deceleration in inflation last month, with prices at the pump rising 6.1% year-over-year.

Excluding gasoline, prices were up 2.5% from a year ago.

The Bank of Canada’s core measures of inflation, which strip out volatile prices, also slowed last month and are all now below 3%.

The central bank has signalled that it is inching closer to cutting interest rates but wants to see the slowdown in inflation sustained for longer.

Prior to Tuesday’s release, economists were split on whether the Bank of Canada could move to cut rates in June or July.

The latest inflation figures are expected to help solidify expectations as the next rate announcement nears.

The Bank of Canada’s key interest rate currently sits at 5%, the highest it’s been since 2001.