By:
Despite rising food and mortgage interest prices, Canada’s annual inflation rate dropped more than anticipated to 5.9% in January, according to Statistics Canada statistics released on Tuesday.
Reuters polled analysts, who predicted annual inflation would fall from 6.3% in December to 6.1%. The consumer price index increased by 0.5% month over month, less than the 0.7% gain economists had predicted after a 0.6% decrease in December.
According to Statscan, the base-year effect of January 2022, when prices had increased because of conflicts between Russia and Ukraine and supply chain disruptions, had a negative impact on the annual rate.
To drive inflation down to its target of 2%, the Bank of Canada increased its benchmark interest rate to a 15-year high of 4.50%. The bank announced that it would postpone further increases as long as prices continued to fall as predicted.
The bank predicts that inflation will begin to decline in 2019 and reach its objective of 2%. By the middle of 2023, inflation is expected to be around 3%.
Excluding food and energy, prices rose 4.9% compared with a rise of 5.3% in December.
Food prices increased 10.4% in January, slightly faster than the 10.1% in December, while mortgage interest payments increased 21.2% yearly, the highest level since 1982.
Inflation was 5.1% on average, down from 5.3% in December, according to the central bank’s basic gauges of underlying inflation, the CPI-median and CPI-trim.
After Canada’s annual inflation data, the Canadian dollar traded 0.2% lower at 1.3480 per U.S. dollar, or 74.18 U.S. cents.
Reading More:
