Inflation Climbs to 2.8% in April Fueled by Rising Gas Prices and Seasonal Factors

Canada’s annual inflation rate increased to 2.8 percent in April, marking the fastest rise in consumer prices since mid-2024. This escalation was largely driven by a sharp surge in gasoline prices, which climbed by nearly 29 percent year-over-year. The increase reflects disruptions in global oil supply linked to the ongoing conflict in Iran and coincides with the seasonal switch to more costly summer gasoline blends across Canadian service stations.

The spike in fuel costs was partially tempered by the federal government’s mid-month suspension of the fuel excise tax, which helped avoid an even steeper price jump. Despite this, April’s inflation exceeded March’s 2.4 percent rate but fell short of economists’ expectations for a rise above 3 percent, according to a Reuters poll.

The inflation comparison also reflects the fading impact of last year’s elimination of the federal consumer carbon price. That policy change had previously lowered gas prices by about 18 cents per litre in April 2025, helping to suppress inflation figures then. With that effect now absent from the year-over-year measure, it contributed to a noticeable upward shift in the headline inflation rate.

Energy price dynamics were balanced somewhat by slower inflation in other sectors. Grocery inflation eased to 3.5 percent from 4 percent the previous month, driven by smaller price increases in items such as chicken, fresh vegetables, coffee, and tea. Meanwhile, clothing and footwear prices rebounded with a 2 percent increase after declining in March.

Notably, travel tour prices saw a substantial annual drop, falling 11 percent, which along with a moderation in rent inflation helped offset some of the upward price pressures. Rent inflation slowed particularly in British Columbia, where population decline contributed to a stable housing cost environment. The province remained unique in not recording an acceleration in its overall inflation rate during April.

This inflation report represents the final data input the Bank of Canada will review ahead of its upcoming interest rate decision scheduled for early June, offering critical insight into the persistent pressures shaping the national economy.