Inflation in Canada Slows to Lowest since 2015 on Oil Glut

(Bloomberg) -- Canada’s inflation rate fell to its lowest since 2015 in March as energy plunged, showing the Covid-19 outbreak is having downward pressure on prices.

The overall consumer price index was up 0.9% in March from a year earlier, after a 2.2% gain in February, Statistics Canada said Wednesday in Ottawa. That’s the biggest one-month drop in annual inflation since 2006 and a weaker reading than the 1.1% economist were expecting.

Much of the decline in inflation was due to a collapse in gasoline prices. Excluding energy, inflation was 1.7%.

Wednesday’s report shows the extent to which the pandemic has caused a deceleration in prices due to lower demand across a range of goods and services. In particular, prices in the energy and travel and tourism sectors were falling even before travel restrictions were put into full effect mid-March.

Other Details

• Core inflation readings -- often seen as a better measure of underlying prices pressures -- declined to 1.83% , the lowest since January 2018
• On a monthly basis, consumer prices fell 0.6% in March. On a seasonally adjusted monthly basis, the index fell 0.9%, the largest decline in records back to 1992.
• Statistics Canada said the most of the price collection for March CPI was largely unaffected by the pandemic, as a majority of the prices were collected prior to the implementation of local travel limitations
• Every province reported a decline in annual price inflation, led by lower prices at the pump from low global oil prices
• The Bank of Canada said this month it expects inflation to fall to near zero in the second quarter

©2020 Bloomberg L.P.