🇨🇦❗️Cable FX Macro Weekly Note: Canada May Consumer Prices

**As seen in Risk In The Week report, get full access now! cablefxm.co.uk

Canada's inflation rate fell to 1.7% year-over-year, down from 2.3% in March 2025, marking the lowest level since September 2024. This slowdown was primarily driven by a significant decline in energy prices following the removal of the federal consumer carbon tax on April 1, 2025. However, core inflation measures, which exclude volatile items like energy, rose, complicating the Bank of Canada's (BoC) monetary policy decisions. Energy prices plummeted 12.7% year-over- year, with gasoline prices dropping 18.1% and natural gas prices falling 3.2% compared to April 2024, largely due to the carbon tax removal. This was a major factor in the headline inflation slowdown.

Underlying price pressures persisted, The BoC measure of core inflation recorded upticks on the month, CPI-Median jumped to to 3.2% in April from 2.8% in March, the highest since March 2024. The CPI-Trim increased to 2% from 1.9%, a 21-month high.

Economists at RBC said tariffs have had limited impact on iinflation, for May, they expect CPI to edge up 1.8% year- over-year from April’s 1.7% with excluding food and energy price growth holding steady at 2.6%. The removal of the consumer carbon tax in April in most provinces will continue to keep energy prices well below levels from a year ago. The Bank of Canada’s preferred core measures (which exclude indirect taxes like the carbon tax) likely eased slightly after exceeding 3% in April, RBC wrote in a note.