OTTAWA –
Statistics Canada is scheduled to report this morning how quickly prices rose in January, with expectations that the annual inflation rate remained around a 30-year high.
The agency said last month that the annual pace of inflation climbed to 4.8 per cent in December, the fastest rate since September 1991.
Economists expect a similar reading for January, driven by changes in gasoline and housing costs compared with the same month one year ago.
CIBC senior economist Andrew Grantham writes in a note that a rebound in energy prices last month should underpin the January inflation reading, though he doesn’t expect the annual inflation rate to change from the 4.8 per cent in December.
Where Grantham sees potential for inflation to climb further is during February because of rising dairy prices at the start of the month and increased costs for auto production connected to protests at key border crossings.
He adds that it may only be in the second half of the year that Canadians could see a noticeable and sustained easing in inflationary pressures.
The inflation report this morning comes exactly two weeks ahead of the Bank of Canada’s next scheduled interest rate announcement.
The central bank has kept its key policy rate at 0.25 per cent since the onset of the COVID-19 pandemic in March 2020, but recently dropped its promise to hold the rate at emergency levels.
The bank is widely expected to raise rates as part of the March announcement in what’s likely the first of several hikes over the course of the year designed to cool inflation.
This report by The Canadian Press was first published Feb. 16, 2022.
