With inflation as high as 1.9%, economists are more confident about Canadian banks’ interest rates
Statistics Canada’s Consumer Price Index reported Tuesday that annual inflation rose to 1.9% last month, up from 1.8% in December, as the impact of the federal government’s full GST break is getting higher .
What affects the total inflation rate in Canada?
“I think the real key here is that some of the core measures of inflation are a little hotter than what Canadian banks would like to see,” said Andrew Grantham, a senior economist at CIBC. ”
“There are a lot of moving pieces here, but overall, we feel better than we expected in terms of potential inflation trends.”
The agency reported that the price of pumps rose 8.6% year-on-year, largely due to a 25.9% rise in Manitoba, which reintroduced its provincial gas tax after a temporary suspension in 2024.
Meanwhile, Statistics Canada said natural gas prices rose 4.8% per year in January, with demand in Ontario and Quebec increasing prices compared to oversupply a year ago.
Restaurant food prices fell 5.1% from the same period last year, helping tame title inflation.
Inflation and GST interruption
Statistics Canada said that without federal tax breaks, overall inflation would increase to 2.7%, up from 2.3% in December.
Two months later, the GST tax relief ended on the weekend.
