The headline inflation rate fell last month to 5.9% from 6.3% in December, a decline that can be explained by a 'base-year effect.'
OTTAWA — After a steep and rapid climb in prices, Canada's inflation rate is expected to fall significantly this year, giving comfort to economists worried about untamed price growth but little relief to Canadians who have fallen behind.
Those glimmers are now more apparent in the data. Statistics Canada reported earlier this week that the headline inflation rate fell last month to 5.9 per cent from 6.3 per cent in December, a decline that can be explained by a "base-year effect." Given much of the acceleration in price growth happened in the first half of 2022, the federal agency said the annual inflation rate will continue to slow in the coming months.
Looking ahead, the Bank of Canada is forecasting inflation will fall to about three per cent by mid-year and back down to two per cent in 2024. Most private sector economists are forecasting similar figures as well.The forecasts come with a major caveat, however: Canada must be spared from unexpected global events that could cause another rise in inflation.
"A good part of the purchasing power erosion we saw over the last year or so, that's likely to be permanent, unfortunately," Jean said. "Unless and until we see incomes pick up." With affordability still top of mind for many Canadians, Jean said "governments are going to be under pressure to perhaps offer more support, especially for the households that are very in need."
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