OTTAWA -
Canada's annual inflation rate resumed its slide toward zero in March, dipping to 1.2 per cent and almost completely reversing the previous month's unexpected jump.
Inflation had been falling in Canada for months and reached a two-year low of 1.1 per cent in January, before February's surprisingly sharp reversal to 1.4 per cent.
Statistic Canada said today that food and shelter costs remain the main drivers of annual inflation in Canada, with the advance in the price of food rising 7.9 per cent last month, the most since 1986.
Meanwhile, lower energy costs, particularly for gasoline, is exerting a downward pressure on the overall consumer price index and is widely expected to push inflation into negative territory over the next few months.
Gasoline prices were slightly higher in March than in February, but compared to last year were down 21 per cent.
Excluding gasoline, inflation would have been double at 2.4 per cent in March, the agency said.
The dampening effect of gasoline on inflation is expected to get even more pronounced in the upcoming months because relatively modest pump prices will be measured against last year's dramatic acceleration as world oil prices shot to $147 US a barrel in mid-July.
The fact oil currently sits in the $50 US range contributes to downward pressure on most energy and transportation-related costs.
Transportation costs fell 6.2 per cent in March, while prices for fuel oil and other fuels fell 32.9 per cent over a year ago.
As well, the cost of purchasing or leasing a passenger vehicle dropped 7.4 per cent, following a 6.4 per cent year-over-year fall in February.
Saskatchewan was tied with Ontario with the highest rate among the 10 provinces at 1.8 per cent. That was down from Saskatchewan's 2.6 per cent in the previous month.
