Canada inflation eases to 2.3% as gas prices fall

Canada's annual inflation rate slowed to 2.3% in January from 2.4% in December, with lower gasoline prices the largest contributor to the deceleration; core measures excluding food and energy also moderated.

Canada's annual inflation rate eased to 2.3 per cent in January, down from 2.4 per cent in December, as Statistics Canada reported a larger decline in gasoline prices. The slowdown arrives as the Bank of Canada weighs its next interest-rate decision amid ongoing trade uncertainty. Desjardins deputy chief economist Randall Bartlett discussed the CPI drivers, including food and shelter costs, and commented on trade-related risks during a BNN Bloomberg interview. Bartlett also noted the bank has more room to provide support if a material negative shock occurs. Key details: - Headline CPI rose 2.3% year over year in January, versus 2.4% in December. - The gasoline price index was the largest contributor to the deceleration; excluding gasoline, CPI rose 3.0% in January, the same as December. - A core measure excluding food and energy was reported at 2.4%, down from 2.6% in December. - Food purchased at restaurants increased 12.3% year over year, partly reflecting a low comparison from last January and the earlier GST/HST break. - Shelter-related costs, including ownership costs and rents, are easing as mortgage interest costs decelerate. - Bartlett said Canada has been spared much of the worst of U.S. tariffs to date and that a Desjardins note on CUSMA review scenarios will be released next week. Summary: The January CPI print shows a modest easing in headline inflation driven mainly by lower gasoline prices while several underlying measures are moving lower. Economists say the reading gives the Bank of Canada scope to remain on hold or respond if trade-related shocks intensify. A note outlining scenarios around the CUSMA review is expected next week.