Canada’s Inflation Drops—But Hidden Price Pressures Put Bank of Canada in a Tough Spot (Source: Reuters)
Canada’s overall inflation rate fell to 1.7% in April, thanks to cheaper energy prices, but experts say core inflation (which excludes volatile items like gas) is still rising, making it harder for the Bank of Canada (BoC) to decide on interest rates.
Key Points (Source: Reuters):
- Lower gas & energy prices pulled inflation down from 2.3% in March after the government removed the carbon tax.
- But core inflation (a key measure the BoC watches) jumped to 3.2%—the highest in over a year, meaning everyday costs (like groceries & travel) are still rising fast.
- The BoC is stuck: Should it cut rates to help the struggling economy or wait because prices are still climbing?
- Markets now see only a 40% chance of a June rate cut, down from 65% before this report.
Why This Matters:
- Groceries are still 3.8% more expensive than last year, and travel costs rose 6.7%.
- The BoC’s next decision is on June 4, and this report makes their job much harder.
- Economists (via Reuters) say the U.S. trade war risks and high core inflation create a “very difficult balance” for Canada’s central bank.
The Bottom Line:
While cheaper gas makes inflation look better, real-life costs (food, trips, bills) are still rising fast—forcing the BoC to think twice before cutting rates again.
(Source: Reuters – For more details, check the full report.)