Canada’s Inflation Drops to 1.8 Percent as Economists Warn of Looming Energy Driven Rebound

Economists warn Canada’s 1.8 percent inflation dip is temporary as oil prices rise. Explore how Dollarama, Aritzia, and Canadian Tire are positioned.

By: AXL Media

Published: Mar 18, 2026, 7:18 AM EDT

Source: Information for this report was sourced from The Motley Fool Canada

The Brief Window of Cooling Inflation

The recent drop to 1.8 percent was influenced in part by last year’s GST/HST holiday, creating a favorable year over year comparison that masks underlying pressures. TD economist Leslie Preston and other market analysts expect this relief to be short lived as higher energy costs begin to ripple through the supply chain. For investors, the focus has shifted toward identifying companies that can maintain margins and consumer interest even if the period of low inflation proves fleeting.

Dollarama (TSX: DOL): The Defensive Powerhouse

Dollarama remains a top pick for its ability to thrive regardless of economic shifts. In fiscal Q3 2026, the retailer reported a 22.2 percent increase in sales to $1.91 billion, with net earnings rising 16.6 percent. While its high trailing price to earnings (P/E) ratio of 42 reflects its status as a market winner, the company’s value driven model ensures consistent traffic when household budgets are squeezed by rising costs.

Aritzia (TSX: ATZ): Capitalizing on "Everyday Luxury"

Aritzia represents a higher risk, higher reward play in the current environment. The premium apparel retailer delivered record net revenue of $1.04 billion in Q3 2026, up 43 percent year over year. Aritzia benefits most when consumers feel enough relief to "trade up" to aspirational products. However, as the highest risk pick of the group, it is particularly vulnerable to a return to 3 percent inflation, which would likely tighten the discretionary budgets of its core customer base.