Canadian Consumer Price Index (March 2026)

Oil prices Boost Canadian Inflation in March

• Headline CPI inflation jumped up to 2.4% year-on-year (y/y) in March, slightly less than consensus expectations. Higher energy prices were a big part of the story, with inflation ex-energy up a more modest 2.2% y/y.
• Prices at the pump soared 21% in March – the largest increase on record. Energy prices as a whole were 3.9% higher versus a year ago, an about face from being down 9.3% y/y in February. But energy prices a year ago still included the consumer carbon levy, which was removed in April 2025. So the impact of energy on inflation is set to get much larger in next month's data.
• Inflation for other key consumer essentials picked up. Grocery inflation picked up again to 4.4% y/y in March, up from 4.1% in February. Shelter inflation also picked up slightly, rising 1.7% y/y, up from 1.5% y/y in February. Despite this, overall services inflation cooled further to 2.5% y/y.
• The Bank of Canada has focused on broader "underlying inflation" recently, but the official core inflation metrics (median and trim), cooled slightly in March to 2.3% y/y. Zeroing in on trends over the past three months, trim and median inflation continued to run well below the Bank of Canada's 2% target.

Key Implications

• As expected, higher oil prices boosted Canadian inflation in March. Oil prices have fallen in recent days but remain nearly 40% higher than a year ago. That means energy prices are likely to keep headline inflation elevated for some time. April's inflation reading is likely to head much higher as the dampening effect of the removal of the consumer carbon levy falls out of the year-on-year inflation calculation.
• Given a generally soft economic backdrop in Canada, we expect the effect on core prices should be more modest. Core inflation is expected to stay reasonably close to the 2% target on a year-on-year basis this year. The Bank of Canada is widely expected to leave its key policy rate unchanged at 2.25% at next week's announcement. We will be listening closely for the Bank's assessment of the impact of the spike in oil prices on Canada's economy.

Disclaimer

This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.