The cost of living in Canada went up at its slowest pace in more than a year in January, as gas prices plunged by 14 per cent compared to the same month a year earlier.
Statistics Canada reported Wednesday that the inflation rate — known as the consumer price index — fell to a 1.4 per cent annual pace in January. That’s down from two per cent in December and ties the lowest level seen since October 2017.
The data agency said the price of most things that go into the inflation rate increased during the month, but energy prices — including gasoline, natural gas, and heating oil — got a lot cheaper. Energy prices as a whole have fallen by almost seven per cent in the past year.
Gasoline prices fell largely U.S. refineries made far more than was needed during the month, which led to deep discounts at the pump for drivers.
Aside from gas, prices for digital computing equipment fell by nine per cent in the past year, travel accommodation was about three per cent cheaper, as were prescription drugs.
Among the spending categories that have seen sharp rises are:
- Fresh vegetables, up 13.2 per cent in the past year.
- Mortgage interest costs, up 7.8 per cent.
- Car insurance premiums, up 5.3 per cent
- Food purchased from restaurants, up 3.5 per cent.
- Rent, up 2.2 per cent.
If gas prices are stripped out, Canada’s inflation rate would have risen to 2.1 per cent in January.
Volatile items like food and energy often wreak havoc with the numbers, which is why the Bank of Canada often strips them out of the math when trying to decide what to do with interest rates.
The central bank uses three such measures to calculate what it considers to be the so-called “core” inflation rate, and all three of those readings came in at 1.9 per cent for the month. That’s the third straight month that bank’s core measures have been at that level, and it’s right in line with what economists were forecasting.
It’s also right in the range the bank likes to see in setting its interest rate decisions, which is why at least one economist thinks the January inflation numbers might be a reason for the central bank to slow down its rate hikes a little.
“The benign inflation environment may lead policymakers to question whether further rate hikes are even necessary,” TD Bank economist James Marple said, “or whether the current policy setting is … just right.”