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Inflation cooled to 2.7% in April as food price growth slowed

Inflation cooled to 2.7% in April as food price growth slowed

Canada's consumer price index fell to 2.7% in April from 2.9% in March, driven by slower food price growth, according to Statistics Canada. Food prices still increased but at a reduced rate of 1.4% in April compared to 1.9% in March. The cost of meat was the primary factor in this decline, along with non-alcoholic beverages, bakery and cereal products, fruits and nuts, and seafood.

In April, Canada unexpectedly added 90,000 jobs, though unemployment remained steady at 6.1%. The Bank of Canada maintained its key interest rate at 5%, indicating progress in the right direction. Gas prices rose by 6.1% in April, up from 4.5% in March, due to seasonal changes in petrol blends, supply concerns, and increased federal carbon levies.

April's 2.7% inflation rate was the lowest in three years. In Alberta, inflation slowed year-over-year, but rent prices surged by 16.2%, significantly higher than the national rate of 8.2%, driven by strong inter-provincial migration.

The Bank of Canada's core inflation measures also eased, a positive sign ahead of its June 5 interest rate decision. Many economists anticipate a rate cut. CIBC senior economist Andrew Grantham suggested that recent data support a rate cut in June, noting the central bank's cautious stance. BMO's chief economist Douglas Porter mentioned that a June rate cut is possible but will depend on the U.S. Federal Reserve's actions. Jim Thorne from Wellington-Altus Financial warned that any rate cut would have delayed effects, and the economic consequences of past policies would be felt over the next year.


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