Statistics Canada data show that fresh vegetable prices recorded the largest increase in almost three years. Canada's inflation rate reached 2.4 per cent in March, up from 1.8 per cent in February, driven mainly by fuel costs. Excluding gasoline, inflation slowed to 2.2 per cent, compared to 2.4 per cent in February.
Food prices increased in March, with store-bought food rising by 4.4 per cent year on year, compared to 4.1 per cent in February. Fresh vegetables recorded the highest increase, rising 7.8 per cent in March, compared to 0.5 per cent in February. This is the largest increase since August 2023, when prices rose by 8.7 per cent.
Cucumbers, peppers, and celery recorded price increases "due in part to tighter supplies related to adverse growing conditions in producing countries," Statistics Canada said.
Restaurant food prices increased by 3.2 per cent in March, compared to 7.8 per cent in February.
Energy prices increased by 3.9 per cent in March, compared to a 9.3 per cent decrease in February. Gasoline prices rose 5.9 per cent year on year and increased 21.2 per cent compared to February. Natural gas prices declined by 18.1 per cent, reflecting supply conditions in North America.
Fuel costs are affecting food prices, according to retail analyst Bruce Winder. "The conflict in the Middle East is causing real-time inflation on transportation costs for food," he said. He added that higher fertilizer prices are also influencing food pricing.
Despite the increase in energy costs, inflation remained close to expected levels. "It could have been worse," said BMO chief economist Doug Porter. "The older, more traditional, measures of core, excluding food & energy, are still hovering right around the 2% target."
The Bank of Canada is expected to maintain its benchmark interest rate. Canadian Chamber of Commerce principal economist Andrew DiCapua said rising fuel costs are now reflected in inflation data. "The longer the conflict in Iran and the closure of the Strait of Hormuz continue, the more it will test Canadians' patience — and the higher the risk of pushing already elevated inflation expectations even further," he said.
Source: Global News
