Inflation cooled to 0.8% in March, dragged down by cheap gas

Consumer prices in Canada rose 0.8 per cent in the 12-month period that ended in March, the lowest pace of gain since late 2013.

Statistics Canada said much of the slowdown was attributed to cheap prices for energy products like gasoline. If energy is stripped out, the inflation rate jumps to 2.2 per cent.

Energy prices dropped by 13.5 per cent in the previous 12 months. Within that, natural gas was down 14.6 per cent, and gasoline prices were 21 per cent lower in March than they were a year earlier.

That impact of cheap gas is likely to stick around for a while, as year-ago comparisons will continue to look overly dramatic. "We expect to see further softness in inflation over the next two quarters until the base effect from lower oil prices runs its course," TD Bank economist Jonathan Bendiner said.

Seven of the eight components of the economy that the data agency monitors went up during the month. The lone exception was the transportation index, which includes gas prices.

Across the country, the inflation rate increased in seven provinces, with Saskatchewan posting the largest increase. Conversely, three of the Atlantic provinces registered year-over-year declines.