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Economic News

Canada: Sticky Core Inflation Keeps the Door Open to More Rate Hikes

May 16, 2023
Marc Desormeaux
Principal Economist


  • Consumer prices climbed by 0.7% in April which led the annual rate of inflation to 4.4%. That represented a modest acceleration compared to March’s 4.3% gain.
  • Gasoline prices fell by 7.7% versus year-earlier levels to hold back the headline rate. However, they jumped 6.3% higher than in March.
  • Excluding food and energy, prices rose by 0.3% in April, in line with the prior two months. On an annual basis, that corresponded to a 4.4% rate of core CPI growth. While that was the weakest year-over-year print since February 2022, three month annualized rates of this and other core measures are accelerating.
  • The Bank of Canada’s trim and median measures both eased to 4.2% on a 12‑month basis—the weakest pace since early 2022. But on three‑month annualized terms, both measures incrementally reaccelerated to rates near 3¾%.


April’s print throws cold water on any notion that we’re out of the woods with inflation. Aggregate price pressures accelerated for the first time in almost a year—exceeding consensus estimates—and remain stubbornly strong. Moreover, the “supercore” trim and median measures—which Desjardins Economics was one of the first shops to identify as critical to the course of monetary policy—also picked up. Core price gains appear to be waning ever so slightly, but they continue to well exceed the 2% target.


April’s inflation data leave the door open for further Bank of Canada rate hikes. Price reacceleration combined with continued strength in the labour market suggest that the economy remains out of balance.

We still think softening economic activity will eventually help bring inflation to heel, but today’s data suggest that the process could take longer than previously anticipated.