Inbesting.com -- Canada’s annual inflation rate accelerated less than anticipated in April as underlying price pressures showed signs of cooling. According to data from Statistics Canada, the consumer price index rose 2.8% from a year earlier, marking its fastest pace since May 2024 but falling short of the 3.1% rate economists surveyed by Bloomberg expected.

Higher energy prices, particularly for gasoline, served as the primary driver behind the acceleration in the headline figure. Geopolitical conflict in the Middle East continued to disrupt energy markets, while gas prices were further pressured by the seasonal transition to more expensive summer fuel blends.

Gasoline prices surged 28.6% year over year in April, following a much milder 5.9% increase reported in March. The annual gain was exacerbated by a base-year effect stemming from the removal of the consumer carbon levy in April 2025, which lowered the prior year’s baseline.

Fuel oil and other fuels also experienced a significant spike, skyrocketing 41.3% from a year ago on the back of rising global oil prices. Simultaneously, natural gas prices saw a much smaller year-over-year decline of 2.4% in April compared to the 18.1% drop witnessed in March.

Stripping out the volatile transportation fuel sector, underlying inflationary pressures across the Canadian economy actually moderated. Excluding gasoline, the consumer price index rose at a slower pace of 2.0% year over year, down from the 2.2% advance logged in March.

A notable slowdown in shelter costs and travel expenses helped cap the broader acceleration of the headline inflation metric. National rent prices rose 3.6% year over year in April, decelerating from a 4.2% pace in March, while travel tour prices plunged 11.0% annually.

Consumer prices ticked up across nearly the entire country, with year-over-year inflation accelerating in nine out of ten provinces. British Columbia stood as the sole exception to this trend, holding steady at 2.5% as a fourth consecutive quarter of population decline cooled local rent growth.