Inflation stood at 5.9% in January in Canada

The consumer price index (CPI) for the grocery basket has risen faster than the average for the entire CPI over the past last months.

The consumer price index (CPI) advanced 5.9%, on an annual basis, in January in Canada. This index stood at 6.3% on an annual basis in December.

Lower prices for cellphone services and motor vehicles contributed to the slowdown in growth of the all-items CPI. However, the cost of mortgage interest and food prices have continued to rise, says Statistics Canada.

The slowdown in inflation continues despite everything in Canada after eight consecutive increases in the key rate by the Bank of Canada since March 2022 in an attempt to contain inflation around 2%.

After hitting an annual high of 8.1% last June, the CPI has essentially been flat all fall. Inflation was 6.9% in September and October, before dropping to 6.8% in November.

In December, the 13.1% decrease in the price of fuel at the pump was offset by the increase in the grocery basket (+11%), the price of clothing and mortgage interest, a direct consequence of the eight consecutive increases of rates decreed by the Bank of Canada.

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In January, the country's central bank set its key interest rate at 4.5% after an eighth consecutive hike since March 2022. The institution suggested at the time that the rate hike was probably over.

Yet in a speech over the past few days, Governor Tiff Macklem opened the door for another key rate hike in 2023, including due to a strong economy and labor market.

Statistics Canada's latest Labor Force Survey showed that the Canadian economy added 150,000 jobs in January. The unemployment rate remained stable at 5% in Canada.

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