Headline inflation stalls and recent dynamic suggests slower pace of moderation

Inflation increased slightly to 4.4% in April the first increase since June 2022. The increase is mainly the result of a reduced drag from gasoline prices and continue strong contribution from shelter costs, especially mortgage interest payments and rent. Nevertheless, there are continued signs of modest moderation in underlying inflationary pressures, with most measures of core inflation easing in April yet remaining elevated, above 4%.

National house prices increased again April. Since the start of the correction, prices nationally have fallen by 14.0%. The correction has been more significant in some markets, especially those with the most significant post-pandemic gains.

Insolvencies rose sharply in March on a seasonally-adjusted basis. This follows a moderation in February and a period of weakness in insolvencies since the end of the summer despite continued strains on households’ finances due to a sharp rise in interest rates and continued deterioration in households’ purchasing power over the period.

Today’s Labour Force Survey data continues to point to a labour market in Canada that remains robust and resilient. The low unemployment rate continues to signal that the labour market remains very tight, something the Bank of Canada is closely monitoring.

The monthly GDP suggests that the Canadian economy is losing momentum after a strong start to 2023. The estimate suggests a small contraction in March and that growth may be flat in the second quarter.

Canadian households have faced a sharp rise in the cost-of-living in recent years, as inflation reached levels not seen since the 1980s. Looking at the provincial data, we find that Albertans have seen the most significant underperformance in their purchasing power since 2019 of all Canadian provinces.

Inflation moderated to 4.3% in March and reached its lowest level since August 2021. The moderation is mainly the result of base effects in energy cost and durable goods prices.

National house prices increased for the first time in a year in March. Since the start of the correction, prices nationally have fallen by 15.5%. However, the correction has been more significant in some markets, especially those with the most significant post-pandemic gains.