Canada’s inflation rate moved higher in March, with rising fuel costs linked to the Iran conflict pushing prices upward and adding fresh pressure on consumers and policymakers.
According to Statistics Canada, the annual inflation rate accelerated to 2.4 per cent in March, up sharply from 1.8 per cent in February. The increase was largely driven by soaring gasoline prices after disruptions and uncertainty in global oil markets.
Energy markets have been rattled in recent weeks by tensions involving Iran, the United States and Israel, including instability around the Strait of Hormuz, one of the world’s most important energy corridors. With a significant share of global oil passing through the region, even short-term disruptions can quickly affect fuel prices worldwide.
Statistics Canada said gasoline prices rose 21.2 per cent on a monthly basis in March — the largest increase on record. That jump was the main force behind the higher headline inflation reading.
Despite the spike, underlying inflation trends were more moderate. Excluding gasoline, inflation would have been 2.2 per cent, marking a second straight monthly easing in core price pressures.
Food inflation also slowed, dropping to four per cent from 5.4 per cent in February. Some of that moderation came as temporary tax-related distortions from the previous year fell out of the annual comparison. However, some grocery categories still saw notable increases, with fresh vegetable prices rising 7.8 per cent year over year due to difficult growing conditions affecting produce such as cucumbers, peppers and celery.
The report now places added attention on the next interest-rate decision from the Bank of Canada. Policymakers have indicated they may look past an initial energy-driven inflation spike, but they will be watching closely to ensure higher gas prices do not spread into broader, long-term inflation across the economy.
For Canadians, the numbers are another reminder of how global events can quickly affect everyday costs at home — from filling up the car to buying groceries.