Following two months of declines in the consumer price index, economists are expecting a higher inflation reading when figures for April come out on Friday.

The consensus forecast calls for a 1.8 per cent year-over-year increase in the price index in April. The expected increase would follow year-over-year CPI gains of 2.1 per cent in January, two per cent in February and 1.6 per cent in March.

On a monthly basis, the consensus forecast is for an increase of 0.6 per cent from March to April.

The main story for April will once again be about energy prices, "with a near-eight per cent increase in gasoline prices during the month," CIBC Capital Markets economist Nick Exarhos wrote in a recent commentary.

After removing more-volatile food and energy prices, the inflation reading should see a month-over-month increase of 0.3 per cent, Exarhos wrote.

"Food prices should see an easing in their pace of year-on-year decline," registering a drop of 1.5 per cent year-over-year in April, he added.

Economists at TD said they expect deflation in food prices to stabilize, although retail competition across grocery stores could still put some downward pressure on prices in the near term.

CIBC expects inflation to firm up further toward the end of this year as crude oil stage a modest comeback, among other factors.

Exarhos said the overall inflation rate is expected to surpass 2½ per cent in the fourth quarter of 2017 and the first three months of next year.

Retail sales data for March

On the same day the inflation figures are released by Statistics Canada, the market will also get a look at retail sales data for March, with the consensus forecast projecting a month-on-month gain of 0.3 per cent, following February's dip of 0.6 per cent.

However, there is some disparity in the March forecasts. TD said retail spending is expected to end the first quarter "on a solid note," and the bank is projecting a month-on-month increase of 0.7 per cent. National Bank is forecasting a 1.2 per cent increase in total retail sales for the month.

"Auto dealers enjoyed a strong March as new vehicles sales posted a fresh monthly record while a possible rebound in used vehicle sales could provide further support" to the overall increase," TD said in a commentary.

Meanwhile, CIBC World Markets sees weakness in auto sales limiting the overall increase to just 0.1 per cent.

"Retailing… is likely to see a softer end to what was still a good quarter for consumption," wrote CIBC World Markets chief economist Avery Shenfeld.