on May 20, 2026 
The latest Consumer Price Index (CPI) report released yesterday shows a mixed bag for Canada. The positive news is that inflation did not jump as high as many experts predicted, and many of the ‘core inflation’ measures remain low. However, the headline number did climb slightly compared to March.
The Main Takeaway: CPI inflation rose to 2.8 per cent in April, but because it stayed lower than the 3.1 per cent that analysts predicted, there is less immediate pressure in the Bank of Canada (BoC) to raise interest rates.
The Numbers At A Glance
- April Inflation Rate: 2.8 per cent
- March Inflation Rate: 2.4 per cent
- What Experts Predicted: 3.1 per cent
Why Prices Are Rising
If you’ve put gas in a car over the last 2 months, you’re painfully familiar with the main cause of inflation right now. The ongoing conflict in Iran and the closure of the Strait of Hormuz have cut off about 20 percent of the global oil supply and caused the prices of fuel to climb significantly.
This spike in fuel costs impacts other areas of daily spending:
- Grocery Bills: It costs more to run farms and transport food, which leads to higher prices at the grocery store.
- Shipping Costs: Moving everyday goods is simply more expensive right now.
The Impact On Interest Rates
Because inflation under 3 per cent and the primary driver of inflation is currently the temporary increase in fuel prices, there is less pressure on the Bank of Canada to raise interest rates in the short term. The BoC typically disregards temporary fluctuations in prices that it believes will come back down quickly once the disruption is resolved.
When you combine this with a softer Canadian job market and our ongoing trade problems with the United States, it is highly likely that the Bank of Canada will keep interest rates steady at their next meeting on June 10, 2026.
Looking Ahead
For the rest of the year, interest rates are for the most part going to depend on how long the Iran conflict continues. If fuel prices stay high through the summer, the cost of manufactured goods will likely start to creep up as production and shipping costs adjust. If that happens, the Bank of Canada may be forced to raise rates later in the year or early next, regardless of how the rest of the economy is doing.
