Canada’s inflation rate fell to its lowest since 2015 in March as energy plunged, showing the Covid-19 outbreak is having downward pressure on prices.

The overall consumer price index was up 0.9 per cent in March from a year earlier, after a 2.2 per cent gain in February, Statistics Canada said Wednesday in Ottawa. That’s the biggest one-month drop in annual inflation since 2006 and a weaker reading than the 1.1 per cent economist were expecting.

Much of the decline in inflation was due to a collapse in gasoline prices. Excluding energy, inflation was 1.7 per cent.

Wednesday’s report shows the extent to which the pandemic has caused a deceleration in prices due to lower demand across a range of goods and services. In particular, prices in the energy and travel and tourism sectors were falling even before travel restrictions were put into full effect mid-March.

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Other Details

  • Core inflation readings -- often seen as a better measure of underlying prices pressures -- declined to 1.83 per cent , the lowest since January 2018
  • On a monthly basis, consumer prices fell 0.6 per cent in March. On a seasonally adjusted monthly basis, the index fell 0.9 per cent, the largest decline in records back to 1992.
  • Statistics Canada said the most of the price collection for March CPI was largely unaffected by the pandemic, as a majority of the prices were collected prior to the implementation of local travel limitations
  • Every province reported a decline in annual price inflation, led by lower prices at the pump from low global oil prices
  • The Bank of Canada said this month it expects inflation to fall to near zero in the second quarter

--With assistance from Erik Hertzberg.