Canada's annual inflation rate climbed to 2.4% in March 2026, up sharply from 1.8% in February, according to Statistics Canada data released Monday. The jump was driven almost entirely by soaring energy prices tied to the U.S.-Iran conflict and its disruption of oil flows through the Strait of Hormuz — and Canadians felt it directly at the gas pump and grocery store.
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Headline CPI (March)
2.4%
▲ Up from 1.8% in February
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Gasoline (monthly)
+21.2%
Largest monthly jump on record
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Grocery prices (year/year)
+4.4%
Up from 4.1% in February
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Core CPI (ex-gas)
2.2%
Milder than expected
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Gas was the main culprit
Gasoline prices surged a record 21.2% month over month in March — the largest single-month jump ever recorded in Canada — as the U.S.-Iran conflict choked off roughly one-fifth of the world's oil supply through the Strait of Hormuz. On a year-over-year basis, Canadians paid 5.9% more for gas in March than they did a year earlier. Fuel oil and other heating fuels jumped 26.1% year over year, adding to the pain for households still heating their homes in late winter.
Silver lining: Excluding gasoline entirely, inflation was only 2.2% — actually milder than February's 2.4% ex-gas reading. BMO chief economist Douglas Porter noted that core inflation came in softer than expected, suggesting the underlying price pressures beyond energy remain relatively contained.
Groceries keep climbing
Food purchased from stores rose 4.4% year over year in March, up from 4.1% in February. Fresh vegetables led the surge, jumping 7.8% annually — Statistics Canada attributed this to tough growing conditions affecting cucumbers, peppers and celery. Transportation costs also rose 3.7% year over year, reflecting the knock-on effect of higher fuel prices across the supply chain.
What it means for the Bank of Canada
The Bank of Canada's next interest rate decision is scheduled for April 29 — just one week away. The central bank has held its overnight rate at 2.25% and has signalled it intends to look past the energy-driven inflation spike as a temporary shock rather than a reason to raise rates. However, with core CPI now running at 2.5% annually — above its 2% target — policymakers face a delicate balancing act between supporting sluggish economic growth and keeping inflation anchored.
CIBC economist Andrew Grantham expects gas prices to continue pushing inflation higher in April, but noted that the federal government's fuel excise tax freeze — which came into effect this week — could moderate the impact when May's numbers are released.
What to watch: April's CPI data will be released on May 19. That report will be the first to reflect the removal of the consumer carbon levy comparison and the fuel excise tax freeze — both of which could meaningfully shift the headline number.
What this means for your wallet
For everyday Canadians, the March data confirms what many already felt: the cost of filling up the tank and the grocery cart is rising fast. The good news is that oil prices have pulled back from their peak above $104 per barrel earlier this month to around $87 as Iran reopened the Strait of Hormuz — suggesting some relief at the pump may be on the way in the coming weeks, though economists caution that market calm may take time to fully filter through to retail fuel prices.
For mortgage holders, the Bank of Canada is widely expected to hold rates steady on April 29. Rate cuts remain unlikely until inflation cools closer to the 2% target — meaning variable-rate borrowers should plan for costs to stay elevated through at least mid-2026.
Data sourced from Statistics Canada, Bank of Canada, CIBC Economics, and BMO Economics. This article is for informational purposes only and does not constitute financial or investment advice. © 2026 MoneySavings.ca
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