Investing.com -- Canada’s annual inflation rate for March surprisingly fell to 2.3%, a decrease from the previous month, mainly due to lower gasoline and travel tour costs, according to data released on Tuesday. This rate is three notches below the rate from the month before. Despite this, the core inflation measures, which are closely watched by the Bank of Canada, remained high, as reported by Statistics Canada.

The year-on-year inflation rate was anticipated to stay at 2.6%, and on a monthly basis, was projected to increase by 0.6%. However, on a month-to-month basis, inflation only rose by 0.3%, as stated by Statscan.

Consumer prices in Canada have been displaying indications of acceleration after maintaining a level of 2% or below for seven months. A sales tax break from mid-December to mid-February helped to conceal real price increases. This was notably seen in the price increase of food and alcoholic beverages, which previously contracted but jumped in March. Food prices surged by 3.2%, and alcoholic beverages saw an increase of 2.4% on an annual basis.

Nevertheless, this surge was majorly offset by a deceleration of 1.6% in the price of gasoline. Excluding gasoline, the consumer price index rose by 2.5% in March, as per Statscan. The decline was mainly due to lower crude oil prices amid concerns of slowing global oil demand and economic growth related to tariff threats, as stated by the statistics agency.

One of the core measures, CPI-median, or the middle component of the CPI basket when arranged in order of increasing prices, remained at 2.9% in March, the same as the prior month. The other core measure, CPI-trim, which excludes the most extreme price changes, slightly slowed to 2.8%, as reported by Statscan.

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