Statistics Canada reported Monday that the Consumer Price Index rose 2.4% year over year in March, the sharpest monthly acceleration since the conflict in the Middle East began reshaping global energy markets. The number was slightly below the 2.5% consensus estimate, but the composition of the report and the trajectory it establishes for April are more consequential than the headline itself.

What the March CPI Report Actually Says

Energy was the dominant driver. Gasoline prices rose 21% on a monthly basis in March, the largest single-month increase on record. Year over year, energy prices swung from negative 9.3% in February to positive 3.9% in March, a 13-percentage-point reversal driven almost entirely by the Hormuz supply disruption. Core inflation, excluding energy, came in at 2.2% year over year, which remains close to the Bank of Canada’s 2% target and well within the policy comfort zone.

Canada CPI: Headline vs. Core Inflation
Year-over-year change, January to March 2026
Jan Feb Mar BoC 2% target 2.3% 1.8% 2.4% 2.5% core 2.3% core 2.2% core
Source: Statistics Canada, Bank of Canada, TD Economics

The distinction between headline and core inflation matters enormously for the Bank of Canada’s April 29 decision. The BoC’s policy framework focuses on core measures, specifically CPI-trim and CPI-median, both of which remain close to 2%. The energy surge that drove March’s headline number is, in BoC language, a “transitory” price shock driven by a specific external supply disruption rather than by broad domestic demand pressure. That framing gives the Bank cover to hold rates without being accused of ignoring inflation. The near-consensus expectation, held by TD Economics, NerdWallet Canada, and most major Canadian financial institutions, is a hold at 2.25% next Wednesday.

The more important question for planning purposes is the April number. The carbon levy comparison base, which provided a meaningful downward drag on year-over-year energy inflation in March, falls out of the calculation entirely in April. TD Economics warned this week that April’s CPI reading is likely to head “much higher” as a result. If Brent crude remains above $100 through April, the combination of the base effect reversal and sustained high pump prices could push headline inflation above 3% in next month’s report, released May 19.

Asset Location in an Inflation Environment

The registered account limits for 2026 are unchanged from 2025: $7,000 for the TFSA, $33,810 for the RRSP. The inflation environment does not change these numbers, but it does change the case for how to use the room.

The core principle of asset location is straightforward: hold the assets with the highest expected return and the most tax-inefficient distributions inside the accounts with the most favourable tax treatment. In a high-inflation environment driven by energy, that principle has a specific and actionable implication. Energy sector holdings, whether direct positions in Suncor or Canadian Natural Resources, energy ETFs, or commodity-linked instruments, are currently generating returns that are both elevated and partially attributable to distributions rather than capital gains. Those distributions are taxable annually in a non-registered account. Inside a TFSA, they compound entirely tax-free.

The RRSP serves a different function in the same environment. For clients whose marginal tax rate today is higher than their expected rate in retirement, RRSP contributions remain the more efficient deduction tool. The $33,810 limit for 2026 is generous relative to prior years, and clients who received energy-driven income boosts, bonuses tied to a strong commodity cycle, or elevated compensation in a tight labour market, may have unusually high earned income this year that makes 2026 an above-average year to maximize RRSP room. That window is worth flagging before year end.

The FHSA, available to eligible first-time buyers, offers a hybrid structure: a deductible contribution like the RRSP and a tax-free withdrawal like the TFSA. At $8,000 per year with limited carryforward room, it rewards consistent annual use. Clients who paused contributions during the market volatility of the past three weeks should be reminded that unused room in the FHSA does not accumulate the same way TFSA room does: only one year of unused room carries forward, meaning inaction has a real cost.