Canada's inflation rate last month was the slowest since October 2013, falling below the central bank's target band on a drop in energy costs.
The consumer price index rose 0.8 per cent in April from a year ago after March's 1.2 per cent pace, Statistics Canada said Friday from Ottawa. The core rate, which excludes eight volatile products, increased 2.3 per cent. That measure accelerated at a 2.4 per cent pace in March, the fastest since 2008.
Economists surveyed by Bloomberg forecast the total rate would rise 1 per cent and core by 2.4 per cent.
Bank of Canada Governor Stephen Poloz said in a May 19 speech it may take until around the end of 2016 before the economy reaches full output and price gains return sustainably to a 2 per cent target.
The report is the last major indicator before the next interest-rate announcement on May 27, and economists surveyed by Bloomberg predict the benchmark overnight rate will remain at 0.75 per cent where it's been since a reduction in January.
The central bank sets interest rates to keep inflation in the middle of a 1 per cent to 3 per cent band. Last month the Bank of Canada said total inflation would average 0.8 per cent this quarter and the core rate would average 2.1 per cent.
A separate Statistics Canada report showed retail sales rose 0.7 per cent to C$42.5-billion ($34.8-billion) in March. Economists surveyed by Bloomberg News forecast a 0.3 per cent increase, based on the median of 18 projections. The increase was led by a 1.5 per cent rise at motor vehicle and parts dealers.
The April drop in total inflation was led by a 13.5 per cent fall in energy prices from a year earlier, after a 10.4 per cent decline in March, Statistics Canada said. Gasoline prices fell 21 per cent on the year, natural gas by 14.6 per cent and fuel oil dropped 20 per cent.
Excluding energy, the inflation rate slowed to 2.2 per cent in April from 2.3 per cent in March.
Crude oil is Canada's top export and the price drop has triggered layoffs and canceled investments from companies such as Talisman Energy Inc. and Cnooc Ltd.'s Nexen Energy.
On a monthly basis, total inflation fell 0.1 per cent in April and the core rate rose 0.1 per cent. Economists surveyed by Bloomberg predicted that overall monthly prices would rise 0.1 per cent and the core rate would advance 0.2 per cent.
Seasonally adjusted inflation fell 0.1 per cent in April and the adjusted core index of prices was unchanged.