Canada inflation slows to 1.8% ahead of Bank of Canada decision as price pressures linger

By Tahani Elghazaly
Published March 16, 2026

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Canada’s annual inflation rate slowed to 1.8% in February from 2.3% in January, according to data released by Statistics Canada on Monday, March 16, 2026, giving markets a key reading just ahead of this week’s Bank of Canada rate decision.

On a monthly basis, the Consumer Price Index rose 0.5% in February, while the seasonally adjusted monthly increase came in at 0.1%, indicating that price movement remains active across parts of the economy even as headline inflation eased.

The data arrives before the Bank of Canada’s next interest rate announcement on Wednesday, March 18. The central bank is closely watching whether the recent moderation in inflation is strong enough to justify holding rates steady and, later on, potentially opening the door to further monetary easing. Economists broadly expect the Bank to keep its policy rate unchanged at 2.25%.

Still, the softer headline number does not tell the full story. Core inflation measures closely watched by the Bank of Canada, including CPI-median and CPI-trim, remained at 2.3%, suggesting that underlying price pressures have not fully disappeared. Inflation excluding the effect of indirect taxes stood at about 1.9% in February.

At the same time, global oil prices remain a major risk factor in the market outlook. Brent crude has moved above $100 a barrel amid geopolitical tensions in the Middle East, raising concern that renewed energy pressure could complicate the inflation path in the months ahead.

For Canadian households and investors, the February report points to some moderation in inflation, but not to the end of cost-of-living strain or pricing risks. That is why the Bank of Canada’s tone this week may matter almost as much as the inflation figure itself, as markets look for clearer signals on the direction of monetary policy.