In January, Canada’s annual inflation rate decreased to 2.9%, lower than the expected 3.3%, primarily due to a decline in gas prices, which fell by 4% year over year. The core inflation rate, excluding volatile sectors like gasoline, remained at 3.2%. Mortgage interest costs continued to be the main driver of inflation at a staggering 27.4% year over year, while rent prices increased to 7.9%.

The Bank of Canada has been striving to curb inflation since March 2022, having raised its key interest rate 10 times. However, it has maintained the rate at 5% since July. Economists anticipate rate cuts starting in the summer, especially as core inflation remains above three percent. Grocery prices rose at a slower pace, with some items like meat and dairy products contributing to a decrease in food inflation, while airfare dropped typical of January, but cell service costs increased as promotional prices ended.