Canada's inflation rate cooled slightly to 2.3% in March as gas prices dropped

Canadians got a break on inflation in March as gas prices fell and a slowdown in travel to the United States helped cool airfare costs, Statistics Canada said Tuesday.

The agency says the annual inflation rate was 2.3 per cent in the month, down from 2.6 per cent in February.

A poll provided by LSEG Data & Analytics ahead of Tuesday's release had expected yearly inflation to hold steady month-to-month.

Statistics Canada said gas prices fell 1.6 per cent year-over-year in March, coming off a hike of 5.1 per cent in February.

The agency also pointed to a drop of 4.7 per cent annually in prices for travel tours last month following a sizeable jump over the long weekend in February.

Airfare costs were down 12 per cent year-over-year in March, Statistics Canada said, and rose only slightly month-to-month.

The agency said the cooling in flight costs came as fewer Canadians traveled to the U.S. last month, when many families typically get away for March break.

March marked the beginning of the tariff war between Canada and the U.S., which has prompted some consumer backlash toward U.S. travel and products in recent weeks.

Cellular prices were also down 6.8 per cent in March from a month earlier, which Statistics Canada said was a result of lower costs for cell plans and industry-wide promotions.

Limiting the overall slowdown in inflation was the end of the federal government's temporary tax holiday in mid February.

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March was the first full month without the federal sales tax relief on a variety of household staples and dining out, which Statistics Canada said provided some lift in the inflation figures compared with February.

Restaurant prices, for instance, rose 3.2 per cent annually in March following a 1.4 per cent decline in February.

The March inflation data comes a day before the Bank of Canada is expected to make its next interest rate decision on Wednesday.

The central bank cut its benchmark rate by a quarter point to 2.75 per cent last month.

More to come.