Your Business News

Canadian inflation fell to lowest since August 2021

April 18, 2023

Authored by RSM Canada LLP

Joe E. Reilly, CPA, CA, CBV shared this article

REAL ECONOMY BLOG | April 18, 2023

Canada’s inflation rate dropped to 4.3% in March on an annual basis from 5.4% in the prior month, driven largely by comparisons to the surging energy and food prices of a year ago, according to data released by Statistics Canada on Tuesday.

While disinflation was expected as the Bank of Canada moved aggressively with its rate hikes—March’s top-line number was the lowest since August 2021—the important question is whether inflation will reach the central bank’s target rate of around 2% this year.

We don’t think that is the case given how sticky some components of the consumer price index have been. Excluding the most volatile components like energy, the trimmed-mean and median inflation measures posted more modest declines to 4.4% and 4.6% in March, respectively. February’s numbers were 4.8% and 4.9%.

Canada CPI

Taking out the base effects by looking at the month-over-month data, core inflation also remained quite sticky compared to the overall inflation number. Core inflation, excluding food and energy, rose by 0.3% from a month ago in back-to-back months on a seasonally adjusted basis.

We think the underlying inflation is currently between 3.5% and 4%, almost double the target rate of 2%. It is unlikely that inflation will stabilize at 2% by the end of the year. A 3% rate is much more achievable.

When that outlook is considered with recent economic data on spending and jobs, we do not expect the Bank of Canada to announce rate cuts until next year. There are certainly upside risks around higher energy prices in the coming months, as OPEC+ recently announced production cuts.

There are increasing signs of a shift in sentiment from inflation as the top concern to recession as the economy continues to slow down.

While the unemployment rate remains at a historic low, we expect a recession in the second half of the year to further push the shift in sentiment as the central bank begins to reassess its monetary policy.

Let's Talk!

Call us at 1 855 363 3526 or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Tuan Nguyen and originally appeared on 2023-04-18 RSM Canada, and is available online at

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

FCR a proud member of RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how FCR can assist you, please call us at 1 855 363 3526

Important Notice:

FCR will now redirect you to CCH Portal where your FCR Client Portal login is located.

Share This