Higher gas prices driven by the Iran war contributed to a jump in Canada's headline inflation number in March.Christopher Katsarov/The Canadian Press
Canada’s annual inflation rate rose 2.4 per cent in March, with prices jumping 0.9 per cent on the month, as higher crude oil costs drove up gasoline prices, data showed on Monday.
The headline annual inflation rate was last seen at this level in December. The monthly inflation spike was the highest in 14 months, Statistics Canada said.
The Iran war, which started in the end of February, has choked crude oil shipments from the Strait of Hormuz, wiping off almost a fifth of global oil supply. This has led to a spike in gasoline prices at the pump and strained consumer budgets.
Analysts polled by Reuters had forecast a slightly higher consumer price index with annual inflation estimate at 2.6 per cent from 1.8 per cent in the prior month, and monthly inflation at 1.1 per cent, up from 0.5 per cent in February.
Canada’s inflation has been benign for well over a year and have stayed around the mid-point of the Bank of Canada’s target range of 1 to 3 per cent.
BoC Governor Tiff Macklem said last week that it was not concerned about a short-term spike in inflation expectations.
The war pushed gasoline prices up by 5.9 per cent on a yearly basis and 21.2-per-cent surge on a monthly basis in March. The year-over-year figure was partly muted due to higher gasoline price during the same period last year due to a carbon levy which was dropped in April, 2025.
The higher gasoline prices increased the cost of transportation, which is the second biggest contributor to the CPI basket, by 3.7 per cent in March from a year ago.
Food prices were also another major contributor to the increase in headline annual inflation, data from the statistics agency said.
Prices for food purchased from stores rose 4.4 per cent annually in March, after increasing 4.1 per cent in February. Prices for fresh vegetables increased 7.8 per cent, the largest increase since August, 2023, Statscan said.
Since headline inflation could be volatile, the BoC and economists also monitor core inflation metrics to gauge the underlying trend of inflation.
Its closely-tracked measures the CPI-median, the centermost component of the CPI basket, stayed unchanged from the prior month at 2.3 per cent, while CPI-trim, which excludes the most extreme price changes, edged down to 2.2 per cent in March.