OTTAWA (Reuters) -Canada’s annual inflation rate eased more than expected to 5.9% in January due to a so-called base-year effect, even as food and mortgage interest costs continued to soar, Statistics Canada data showed on Tuesday.
Analysts polled by Reuters had expected annual inflation to edge down to 6.1% from 6.3% in December. Month over month, the consumer price index was up 0.5%, again lower than analysts’ forecast of a 0.7% gain after a 0.6% decline in December.
Statscan noted that the annual rate was impacted by downward pressure from the base-year effect of January 2022, when prices had risen amid Russia-Ukraine tensions as well as supply chain disruptions.
The Bank of Canada has raised its benchmark interest rate to a 15-year high of 4.50% to bring inflation down to its target of 2% and said it would hold off on further increases as long as prices eased as forecast.
The bank forecasts inflation to slow to about 3% by the middle of 2023, and to come down to its 2% target next year.
Excluding food and energy, prices rose 4.9% compared with a rise of 5.3% in December.
Mortgage interest costs rose 21.2% annually in January, the largest increase since 1982, while food prices rose 10.4%, slightly faster than the 10.1% in December.
The average of two of the central bank’s core measures of underlying inflation, CPI-median and CPI-trim, came in at 5.1% compared with 5.3% in December.
The Canadian dollar was trading 0.2% lower at 1.3480 per U.S. dollar, or 74.18 U.S. cents, after the inflation data.
(Reporting by Ismail Shakil; Additional reporting by Fergal Smith in Toronto and Dale Smith in Ottawa; Editing by Mark Porter)
