The Consumer Price Index slowed more than expected in January to 2.9%, after increasing 3.4% in December.
This slowdown in inflation is more marked than that expected by observers. The drop in gasoline prices recorded in January, for a fifth consecutive month, contributed to the decline in overall inflation. Also, a general slowdown in price growth at grocery stores moderated CPI growth.
Statistics Canada even points to price drops for certain foods such as soup (-2.1%), bacon (-8.4%) and shrimp (-3.4%).
On a monthly basis, the CPI remained unchanged in January, after falling 0.3% in December.
In Quebec, the annual rate of price increases increased from 4% in December, the highest rate in Canada, to 3.3% in January.
Prices are rising less quickly, but the Bank of Canada’s return to the 2% target is slow and could delay the expected drop in interest rates.
The next central bank rate decision is March 6. Governor Tiff Macklem has said you don’t necessarily have to wait for inflation to return to target before starting to cut interest rates if the economic slowdown continues.