Food Prices a Key Factor as Inflation Slows in April

Food prices helped to lead the way as the Canadian inflation rate slowed to 2.7% on a year-over-year basis in April, Statistics Canada’s consumer price index (CPI) showed Tuesday. 

It marked the fourth straight month the headline inflation rate has cooled (2.9% in March) and was slightly slower than the average pre-report trade guess of 2.8%. 

The broad-based deceleration in the CPI was led by prices for food purchased from stores, which showed a 1.4% gain in April versus the 1.9% increase seen in March. Price growth for food purchased from restaurants also eased on a yearly basis, rising 4.3% in April 2024 following a 5.1% increase in March. 

Meat contributed the most to slower price growth in food purchased from stores, largely due to a base-year effect in prices. Non-alcoholic beverages; bakery and cereal products; fruit, fruit preparations and nuts; and fish, seafood and other marine products also contributed to this month’s slowdown in food price inflation. 

But while food price gains are indeed slowing – peaking at 11.4% in September 2022 – today's StatsCan report noted that prices are still up by more than 21% from three years ago. 

On the other hand, gasoline prices moderated the overall deceleration in the CPI. StatsCan said consumers paid 6.1% more at the pump year over year in April, following a 4.5% increase in March. Faster growth was driven by a 7.9% month-over-month increase in April.  

“Higher costs associated with switching to summer blends, higher oil prices due to supply concerns and an increase in the federal carbon levy all contributed to the increase in prices,” the federal agency said. 

The slowdown in headline inflation in April likely increases the chance of the Bank of Canada finally starting to reduce interest rates in June.