Statistics Canada reported this morning that the Consumer Price Index (CPI) rose by 2.3% year over year in March. This marks a decline in inflation, which had jumped to 2.6% in February, driven in part by the end of the temporary GST/HST holiday.

The federal agency noted that the slowdown in inflation is largely attributable to a drop in gasoline prices. Excluding gasoline, the CPI increased by 2.5% in March.

Air transportation prices also fell by 12.0% year over year in March, following a decrease in the number of Canadian air trips to the United States.

In Quebec, the CPI rose by 1.9% year over year in March.

Implications

As the decline in the inflation rate was slightly more pronounced than expected by financial markets, this would normally ease some pressure on government bond yields, which influence fixed mortgage rates. However, inflation has become a less important factor for markets lately, as uncertainties related to the tariff war tend to dominate.