‘Unambiguously good’: Inflation slows in February as price growth unexpectedly eases

OTTAWA – Canada’s inflation figures came in softer than expected for a second consecutive month, suggesting to economists that the Bank of Canada will have ample grounds to begin cut interest rates in the coming months. Statistics Canada released its consumer price index report(opens in a new tab) Tuesday, which shows the annual inflation rate fell to 2.8 per cent amid sharp declines in cellular and internet services, as well as slower grocery price growth.
Economists were widely expecting Canada’s inflation rate to have risen above January’s 2.9 per cent, in part due to higher gasoline prices. This is an unambiguously good report from the Bank of Canada’s perspective. It essentially shows that high interest rates are working to tame inflation, which is what they’re looking for to start cutting interest rates,” said Katherine Judge, a director at senior economist and CIBC Capital Markets, in an interview.
The federal agency says prices for wireless services were down 26.5 per cent and internet prices fell 13.2 per cent from a year ago.
OTTAWA – Canada’s inflation figures came in softer than expected for a second consecutive month, suggesting to economists that the Bank of Canada will have ample grounds to begin cut interest rates in the coming months.
Statistics Canada released its consumer price index report(opens in a new tab) Tuesday, which shows the annual inflation rate fell to 2.8 per cent amid sharp declines in cellular and internet services, as well as slower grocery price growth.
Economists were widely expecting Canada’s inflation rate to have risen above January’s 2.9 per cent, in part due to higher gasoline prices. ‘The elephant in the inflationary room’: Economists react to CPI data
The latest on inflation in Canada
“This is an unambiguously good report from the Bank of Canada’s perspective. It essentially shows that high interest rates are working to tame inflation, which is what they’re looking for to start cutting interest rates,” said Katherine Judge, a director at senior economist and CIBC Capital Markets, in an interview. The federal agency says prices for wireless services were down 26.5 per cent and internet prices fell 13.2 per cent from a year ago. Prices for food purchased at stores in February were up 2.4 per cent from a year ago, marking the first time prices grocery prices rose more slowly than overall inflation since October 2021.
However, that’s little relief to Canadians who continue to pay significantly higher prices for food than they did a few years ago. The federal agency says grocery prices increased 21.6 per cent between February 2021 and February 2024. Meanwhile, housing costs continue to put upward pressure on inflation, with mortgage interest costs up 26.3 per cent and rent up 8.2 per cent annually.
Still, the report Tuesday is encouraging for the Bank of Canada, which is looking for more evidence that inflation is sustainably headed back to the country’s two per cent target before it moves to lower interest rates.
February marks the second straight month that inflation fell within the Bank of Canada’s one to three per cent target range.
The central bank’s preferred core measures of inflation, which strip out volatility in prices, also fell last month.
“The core measures are the ones that are really important from the Bank of Canada’s perspective, because they exclude things that aren’t a good signal of underlying demand,” Judge said. Source: ctvnews.ca