Inflation slowed sharply to 2.9% in January as gas prices fell
The annual rate of inflation across the country eased half a percentage point in January thanks largely to lower gas prices, according to Statistics Canada.
The overall inflation rate was 2.9 per cent in January, the agency said Tuesday. That’s down from 3.4 per cent in December, when it accelerated slightly from the previous month.
Gas prices fell month-to-month for the fifth consecutive month, StatCan says. A pause to the provincial gas tax in Manitoba contributed to the decline.
Price growth at the grocery store also cooled significantly, up 3.4 per cent in January compared to 4.7 per cent in months previous. While StatCan says the cooling in food inflation was “broad-based” across aisles in the grocery store, some items including shrimp and prawns, soup and bacon saw year-over-year price drops.
Airfares were cheaper on an annual basis – down 14.4 per cent in January compared with 9.7 per cent in December – and consumers were also paying less for clothing last month, according to StatCan.
Cellular services prices ticked back up on a monthly basis following the end of promotional campaigns in November and December, the agency said.
StatCan noted that January marked the first month-to-month decline in the overall consumer price index on a seasonally adjusted basis – the first time this has happened since the start of the COVID-19 pandemic almost four years ago.
Economists had expected inflation had cooled in January, but not necessarily this much.
BMO chief economist Doug Porter said in a note to clients on Tuesday morning that a cool start to the year for price hikes can send a vital signal for the rest of 2024.
“January can set the tone for inflation, since firms often take the opportunity to adjust prices for the
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