OTTAWA — Canada’s annual inflation rate resumed its slide toward zero in March, dipping to 1.2 per cent and almost completely reversing the previous month’s unexpected jump.

Inflation had been falling in Canada for months and reached a two-year low of 1.1 per cent in January, before February’s surprisingly sharp reversal to 1.4 per cent.

Statistics Canada said Friday that food and shelter costs remain the main drivers of annual inflation in Canada, with the advance in the price of food rising 7.9 per cent last month, the most since 1986.


Meanwhile, lower energy costs, particularly for gasoline, is exerting a downward pressure on the overall consumer price index and is widely expected to push inflation into negative territory over the next few months.

Gasoline prices were slightly higher in March than in February, but compared to last year were down 21 per cent.

Excluding gasoline, inflation would have been double at 2.4 per cent in March, the agency said.

The dampening effect of gasoline on inflation is expected to get even more pronounced in the upcoming months because relatively modest pump prices will be measured against last year’s dramatic acceleration as world oil prices shot to US$147 a barrel in mid-July.

Oil currently sits in the US$50 range is contribution to downward pressure on most energy and transportation-related costs.

Transportation costs fell 6.2 per cent in March, while prices for fuel oil and other fuels fell 32.9 per cent over a year ago.

As well, the cost of purchasing or leasing a passenger vehicle dropped 7.4 per cent, following a 6.4 per cent year-over-year fall in February.

But with food and shelter costs remaining high, the inflation rate stayed well clear of falling below zero for now.

Statistics Canada said food price increases were widespread in March, with the price of fresh vegetables jumping 26.5 per cent, fresh fruit by 19.3 per cent, non-alcoholic beverages 10.2 per cent, cereal products by 11 per cent, while meat was 7.6 per cent higher.

The cost of potatoes popped 54.9 per cent, largely as a result of poor harvests in Canada.

Shelter costs rose 2.1 per cent last month, a slower rate of increase than in February.

On a month-to-month basis, consumer prices rose 0.2 per cent, after rising 0.7 per cent in February.

Meanwhile, the Bank of Canada core rate — which excludes volatile items such as energy and many foods — stood exactly on the desired target of two per cent, a slight increase from February’s 1.9 per cent level.

Across Canada, the agency said inflation slowed in all provinces except for the two most populous.

In Ontario, prices rose to 1.8 per cent in March from 1.5 per cent, while in Quebec, inflation held steady at 0.8 per cent.

Statistics Canada released rates for major cities, but cautioned that figures may fluctuate widely because they are based on small statistical samples (Previous month in brackets):

—St. John’s, N.L., 1.1 (1.3)
—Charlottetown-Summerside, 0.2 (1.2)
—Halifax, 0.2 (0.2)
—Saint John, N.B., 0.3 (0.4)
—Quebec, 1.0 (0.8)
—Montreal 1.1 (1.0)
—Ottawa 2.1 (1.8)
—Toronto 2.1 (1.7)
—Thunder Bay, Ont., 1.9 (1.9)
—Winnipeg, 1.1 (1.7)
—Regina 2.6 (3.3)
—Saskatoon 1.6 (2.4)
—Edmonton 1.2 (2.4)
—Calgary 1.1 (2.4)
—Vancouver 1.3 (1.6)
—Victoria 1.1 (1.5)

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