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Economic Viewpoint

The Price Is Right: Unpacking Our CPI Inflation Forecast

June 12, 2025
Randall Bartlett, Deputy Chief Economist • LJ Valencia, Economic Analyst • Tiago Figueiredo, Macro Strategist

Highlights

  • Just when it seemed that the worst of the pandemic price gains were over, the outlook for Canadian inflation has been hit with substantial offsetting policy shocks.
  • The year started with the short-lived GST/HST holiday, which provided some temporary relief, particularly for food, from still-elevated prices following the pandemic. But as this came to an end, the trade war with the United States ramped up, and retaliatory tariffs added to the price of imported goods. Food prices are again notably impacted and will continue to be going forward.
  • However, the elimination of the federal price on pollution will provide a substantial offset to this tariff-induced price hike, particularly for the year starting in April 2025. Lower interest rates and a likely lacklustre performance in the housing market should also help to keep downward pressure on shelter inflation—the primary expense for most households.
  • Taken together, despite these offsetting policy impacts, we expect headline CPI inflation to remain near the Bank of Canada’s 2% inflation target for the foreseeable future.
NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.
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