Energy shock lifts inflation to 2.8%: StatCan

Canada’s annual inflation rate accelerated in April as surging energy costs pushed the Consumer Price Index (CPI) up 2.8% year over year, Statistics Canada reported.

The increase compares with a 2.4% gain in March. On a monthly basis, the CPI rose 0.4% in April, or 0.3% after seasonal adjustment.

Energy prices climbed 19.2% year over year in April, after a 3.9% increase in March, with gasoline leading the gains.

Energy was the main source of upward pressure on prices. “In April, energy prices rose 19.2% year over year, following a 3.9% increase in March,” Statistics Canada said, marking a sharp jump that feeds through to commuting, travel and operating costs.

Gasoline prices rose especially quickly. “Gasoline prices continued to increase year over year in April, rising sharply by 28.6% after a 5.9% gain in March,” the agency reported. StatCan linked this to the “removal of the consumer carbon levy on April 1, 2025,” which created a large price drop last year that has now fallen out of the 12‑month comparison, as well as supply uncertainty from the conflict in the Middle East and the switch to a more expensive summer blend.

Prices for fuel oil and other fuels increased 41.3% year over year, while natural gas remained cheaper than a year earlier but posted a smaller decline of 2.4% compared with an 18.1% drop in March. For HR, higher fuel-related costs can add pressure on employees’ disposable income and may factor into discussions on hybrid work, travel policies and commuting supports.

A previous StatCan report showed that the Consumer Price Index (CPI) rose 2.4% in March 2026 compared with a year earlier, up from 1.8% in February.

Rising prices are shaking Canadians’ confidence in their ability to retire comfortably and pushing many to dial back on long‑term saving, raising fresh questions for employers about the adequacy of workplace retirement programs and financial education, according to a previous report.

The inflation picture

Statistics Canada underlined that base-year effects are influencing the headline rate. Inflation is measured as the percentage change between the current month’s CPI and the same month a year earlier, meaning past price swings can amplify or dampen today’s figure.

The agency explained that “When a large 1-month upward price change in the base month stops influencing, or falls out of, the 12-month price movement, this has a downward effect on headline CPI in the current reference month.” Conversely, “when a large 1-month downward price change in the base month falls out, this creates upward pressure on the current reference month's 12-month figure.”

This helps explain why inflation excluding gasoline is more subdued. Statistics Canada noted that “Excluding gasoline, the CPI rose at a slower pace year over year in April (+2.0%) compared with March (+2.2%),” suggesting underlying price growth is closer to the Bank of Canada’s target and offering HR teams a useful reference point for compensation strategy.

Provincial inflation: Quebec and B.C. stand out

Inflation trends varied across the country, with prices rising faster in nine provinces than in March. For employers operating nationally, this widens regional differences in cost-of-living conditions.

Quebec’s annual inflation rate edged up to 3.0% from 2.9% in March. Statistics Canada noted that Quebec “was not impacted by the removal of the consumer carbon levy in April 2025 due to the province's existing cap-and-trade system,” leaving its price profile different from most other provinces.

British Columbia was the only province where price growth did not accelerate, with inflation holding at 2.5% in April. Rent growth slowed markedly there, rising 3.4% in April after a 6.4% increase in March, and Statistics Canada said the province’s population “has declined for four consecutive quarters.”

Economists’ outlook

BMO chief economist Doug Porter told investors that “looking beyond the nasty business at the gasoline pumps, this report is unambiguously soft,” CBC reported.

“If it weren’t for those bothersome items like filling up your car and paying for groceries, there would be almost no inflation,” Porter wrote, according to the report. He also suggested that higher energy prices may be causing households to cut back on other spending, potentially putting disinflationary pressure on non‑energy sectors.

Some price pressures have yet to appear fully in the data. CBC reported that CIBC senior economist Andrew Grantham said higher airfares linked to rising fuel costs were not reflected in April’s figures because airline transactions are recorded when flights occur, not when tickets are bought. Grantham told clients he expects those effects to show up more clearly in the summer inflation readings, pointing to possible increases in travel‑related costs.

Grantham also said continued softness in core inflation could provide “breathing room” for other sectors and help limit overall price growth even as higher fuel costs filter through the economy, according to the CBC report.

Other key data that impact employers, according to StatCan: