Economists and market watchers are firming up their bets for Bank of Canada interest rate cuts after another soft inflation report showed more signs of easing price pressures.

The annual inflation rate slowed to 2.7 per cent in April, Statistics Canada said Tuesday, as cooling grocery price pressures offset higher fuel costs.

Inflation on food bought from the grocery store slowed to 1.4 per cent annually last month, down from 1.9 per cent in March, according to the agency.

Slowdowns in annual price growth for meat, non-alcoholic beverages and bakery and cereal products helped to pull down the yearly inflation rate, StatCan said. Fruits, nuts and seafood products meanwhile saw annual price declines.

Taking a longer view, the agency noted that prices at the grocery store had jumped 21.4 per cent from April 2021.

Household furnishings and the clothing and footwear categories saw outright declines in prices year-over-year, according to StatCan.

But gas prices were growing at a faster annual pace as consumers paid 7.9 per cent more month-to-month in April. Higher global oil prices, gas stations switching to more expensive summer blends and a hike in the federal carbon levy contributed to the gain, StatCan said.

Rising costs for rent and homeowners renewing their mortgages continue to put upward pressure on shelter inflation.

April was particularly difficult for renters in Alberta, according to the agency. Rent prices were up 16.2 per cent year-over-year in the province, almost double the 8.2 per cent hike nationally.

Prices rose on a month-to-month basis in April, but because the jump was smaller than the same time last year, the overall inflation rate slowed from 2.9 per cent in March.

Randall Bartlett, senior director of Canadian economics at Desjardins, told Global News in an interview that everything is “trending in the right direction” when it comes to inflation.

While shelter remains “red hot” and gas prices are putting pressure on the consumer price index, he said there is otherwise “broad-based” deceleration in inflation.

“It really is a story now of largely one or two sectors that are driving a big part of what we’re seeing in terms of the headline (inflation number),” he said.

April’s report marks the fourth consecutive “tame” reading for the annual inflation index, BMO chief economist Doug Porter said in a note to clients Tuesday morning. It also marks the final reading the Bank of Canada will get on price pressures ahead of its next interest rate decision on June 5.

Cited from: Global News