By Kelsey Johnson
OTTAWA (Reuters) - Canada's annual inflation rate tumbled to a near five-year low of 0.9% in March as the coronavirus crisis and an oil supply war slashed gasoline prices, Statistics Canada said on Wednesday.
Analysts in a Reuters poll had forecast a rate of 1.2% in March, down from the 2.2% in February. Excluding gasoline prices, the annual inflation rate was 1.7% in March.
"Canada's CPI saw a sharp contraction in March that was more pronounced than expected but not a shock given the severe impact on the economy of stay-at-home orders and the tumble in oil prices," said Ryan Brecht, a senior economist at Actions Economics.
The overall rate was the lowest since the 0.9% registered in May 2015. The Bank of Canada last week said the inflation rate was likely to drop to around 0% in the second quarter on sharply lower gas prices.
"It's quite possible we might see zero or even a negative reading in the months ahead," said Doug Porter, chief economist at Bank of Montreal after the data release.
"It will have been very difficult to have collected prices during the month of April. After this month, the data are going to be a little bit suspect," Porter added.
Officials have shuttered non-essential businesses and urged people to stay at home since mid-March as part of efforts to slow the spread of the novel coronavirus.
Statistics Canada said on Wednesday the collection of the March data was largely unaffected by the coronavirus pandemic.
The Canadian dollar strengthened to about C$1.4130 per U.S. dollar, or 70.77 U.S. cents, as oil prices rebounded after earlier hitting a 21-year low.
Energy prices in March fell 11.6% on a year-over-year basis, driven by the largest one-month price decline since November 2008, Statscan said. Consumers paid 21.2% less for gasoline than in March 2019.
CPI common, which the central bank says is the best gauge of the economy's underperformance, was at 1.7%. CPI median, which shows the median inflation rate across CPI components, was at 2.0%, while CPI trim, which excludes upside and downside outliers, was at 1.8%.
(This story corrects to show consumers paid 21.2% less for gasoline than in March 2019, not 21.5%.)