The federal government’s lowering of the consumer carbon tax rate to zero will temporarily reduce Canada’s inflation rate by around 30 percent, according to the Bank of Canada.
The removal of the federal fuel charge will pull down Consumer Price Index (CPI) inflation by 0.7 points from April 2025 to March 2026, according to the Monetary Policy Report released on April 16. Canada’s inflation rate was at 2.3 percent in March.
The Bank of Canada said that since the carbon tax came into effect, it has added 0.1 to 0.15 percent to the inflation rate for consumer prices each year. It said the removal of the tax will lower inflation primarily due to lower gasoline prices, as the tax has added around 18 cents per litre to fuel prices since it was introduced….