Canada's Inflation Rate Falls Below 3%

Canada’s inflation rate fell below 3% in January, bringing it closer to the Bank of Canada’s 2% target, as gasoline prices and airfares declined sharply during the month.

The annual inflation rate declined to 2.9% in January, down from 3.4% in December of last year, according to Statistics Canada.

The biggest contributor to the decline was a 4% drop in gasoline prices from a year earlier. Partly offsetting the decrease in gas prices was a 3.4% annualized increase in grocery prices.

However, in all, price growth declined in five of eight inflation categories during January.

Canada’s inflation rate had fallen below 3% in June 2023, dropping to 2.8%, but rebounded in the second half of last year as consumer prices again climbed upwards.

But now, with the economy weakening, inflation is again on the decline.

Airfares fell 23.7% in January from December when prices were elevated during the busy holiday travel season.

At the same time, prices charged for clothing and footwear decreased 3.2% in January from the month before.

The Bank of Canada has held its benchmark overnight interest rate steady at its current level of 5% but is expected to lower rates later this year as the economy weakens and inflation drops.

The central bank’s next interest rate decision is scheduled for March 6.

Source link

About The Author

Scroll to Top