Inflation dropped to 2.8% in February amid relief at grocery store

globalnews.ca:

The annual rate of inflation ticked down in February amid relief at the grocery store, Statistics Canada said Tuesday.

Overall inflation was 2.8 per cent year-over-year in February, down from 2.9 per cent in January, the agency said. The easing surprised most economists, who had expected an uptick in inflation for the month.

Prices at the grocery store were one of the biggest contributors to the step down, rising 2.4 per cent in February, down from 3.4 per cent in the previous month. This marks the first month since October 2021 that grocery inflation came in below the overall inflation rate, StatCan noted.

The cooling inflation was “broad-based” across aisles at the grocery store, according to the agency. Prices for fresh fruit, processed meat and fish declined year-over-year in February, while other components including bakery and dairy products saw prices grow but at a slower pace than January.

Cheaper wireless services also contributed to the decline in overall inflation, StatCan said, as providers were offering cheaper phone and internet plans.

Housing costs meanwhile continue to put pressure on household budgets. Shelter prices rose 6.5 per cent year-over-year last month, up from 6.2 per cent in January.

Prices for gasoline were 0.8 per cent higher year-over-year in February, StatCan said. Canadians were also paying more for travel tours year-over-year.

The Bank of Canada is watching for signs that inflation will cool all the way back down to its two per cent target before it considers cutting its benchmark interest rate.

More to come.