Canadian headline inflation turns negative in April

Canada’s headline inflation turned negative in April. On a year-on-year basis, consumer price inflation came in at -0.2 percent from +0.9 percent seen in March. Energy prices dropped 23.7 percent year-on-year, led by gasoline that fell 39.3 percent, primarily contributing to the fall in prices. Stripping energy, prices rose 1.6 percent year-on-year.

Adjusting for seasonality, consumer prices dropped 0.7 percent sequentially. This followed a 0.9 percent fall in March. The other categories seeing price falls were those most heavily-affected by COVID-related shutdowns. Traveler accommodation dropped 9.8 percent year-on-year and clothing and footwear prices fell 4.1 percent. Meanwhile, food prices accelerated to 3.4 percent year-on-year.

Only one of three of the Bank of Canada’s core inflation measures eased in April. CPI-common dropped to 1.6 percent, while CPI-median and CPI-trim remained at 2 percent and 1.8 percent, respectively.

“The biggest item bringing down the index – the price at the pumps – has moved higher in recent weeks. With activity slowly normalizing through May, the biggest of the price declines are likely in the rear-view mirror”, stated TD Economics in a research report.