Disinflation Is Apparent Beneath Oil-Driven CPI Headline in Canada, Says Macquarie Economist

06:56 AM EDT, 04/21/2026 (MT Newswires) -- Canada's inflation measures were mixed in March, said David Doyle, head of economics at Macquarie Group, after Monday's consumer price index data.

Doyle noted headline inflation accelerated to 2.4% year over year due to gasoline. The average of trim/median rose by 0.2% month over month and by 2.25% year over year.

He also noted traditional core (excluding food/energy) was flat on the month and 1.9% year over year. The trajectory of year-over-year measures was impacted by base effects emanating from the temporary GST/HST tax cut last year, he said.

In the near term, core inflationary pressures from higher oil prices may be offset by the output gap, softness in housing, and recent strength in the Canadian dollar (CAD or loonie), stated Macquarie's economist. Later in the year, he anticipates that a shrinking output gap amidst economic improvement and negative population growth may lead to a modest firming in underlying inflation.

Doyle predicts that the Bank of Canada will remain on hold in the months ahead. The economist believes the next BoC move will be a hike as the output gap diminishes and unemployment falls.

Macquarie's baseline for this to occur remains Q4 2026. "Should trade policy uncertainty with the United States rise and/or inflation come in more sharply than we anticipate, it could delay this timing," he added.

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