Statistics Canada’s consumer price index on Tuesday reported the annual inflation rate rose to 1.9% last month, up from 1.8% in December, as the effects from a full month of the federal government’s GST break were offset by higher fuel costs.
What’s affecting Canada’s overall inflation rate?
“I think what’s really the key here is that some of the core measures of inflation, again, were a little bit hotter than maybe the Bank of Canada would like to see,” said CIBC senior economist Andrew Grantham in an interview.
“There’s a lot of moving pieces here, but overall maybe a touch stronger than we expected in terms of the underlying inflation trends.”
The agency reported prices at the pump jumped 8.6% year-over-year, in large part because of a 25.9% spike in Manitoba, where the province reintroduced its provincial gas tax after a temporary suspension through 2024.
Meanwhile, natural gas prices rose 4.8% annually in January, with an increase in demand pushing prices higher in Ontario and Quebec compared with an oversupply a year ago, Statistics Canada said.
Restaurant food prices declined by a record 5.1% from a year ago, helping to tame the headline inflation number.
Inflation and the GST break
Statistics Canada said without the federal tax break, overall inflation would have risen to 2.7%, up from 2.3% in December.
The GST tax break ended over the weekend after two months.
