Canada’s annual inflation rate rose from 3.1% to 3.4% in December, meeting analyst expectations and maintaining pressure on the central bank. Despite hopes for a rate cut, the Bank of Canada (BoC) is expected to keep its key policy rate unchanged in its upcoming announcement on January 24.

Higher gasoline prices, airfares, fuel oil, vehicles, and rent primarily fueled the inflation increase. Excluding energy and food prices, the annual inflation rate slightly slowed to 3.4% from 3.5% in November. As core inflation continues to rise, we can expect BoC to exercise more caution and seek further progress before considering rate cuts.