Canada's annual inflation rate rose to 3.4% in December from 3.1% in November, based on data reported on Tuesday. The inflation rate matched estimates by economists polled by Reuters.
On a monthly basis, consumer prices also matched expectations and were down 0.3% from November. The annual rate of inflation was mostly driven by an increase in gasoline prices last month compared to the same period a year ago, although prices have fallen for four consecutive months, Statistics Canada reported.
Excluding gasoline estimates, inflation slowed year-on-year, from 3.6% in November to 3.5% in December, the Department reported. The price of food purchased from stores rose 4.7% in December, the same annual rate as November. Excluding energy and food prices, the annual inflation rate slowed to 3.4% from 3.5% in November.
One of the core measures of inflation used by the Bank of Canada (BoC), CPI-trim, rose slightly to 3.7%, while CPI-median remained at 3.6%. The failure of fundamental measures to slow down is a sign that inflation is likely to slow down.
Canada's central bank has so far raised policy rates to a record high of 5% between March 2022 and July last year to curb inflation. The central bank's next interest rate announcement is on January 24, where the BoC is expected to keep its key interest rate on hold.
Financial markets and economists expect the central bank to start cutting rates in the first half of 2024. The BoC previously predicted inflation should reach its target by the end of 2025, but Governor Tiff Macklem told reporters last December that the BoC should be closer to the target by the end of the year. .
