February 2023 – Canada’s inflation is slowing down

The latest report by Statistics Canada shows that the annual pace of inflation cooled last month, marking the strongest slowdown since April 2020.

According to recent data, the consumer price index rose by 5.2% in February on a year-over-year basis, following an increase by 5.9% seen in January. February result is the lowest annual inflation rate since January 2022 when it reported 5.1%.

Statistics Canada explains the decrease by a sharp monthly hike in prices seen in February 2022 when the global economy was significantly impacted by the Russian invasion of Ukraine.

However, in spite of the overall cooling, grocery prices were still elevated, exceeding the overall inflation. For instance, food prices in stores rose by 10.6% last month annually, marking the seventh month of double-digit gains in a row.

At the same time, energy prices fell by 0.6% on a year-over-year basis, as gasoline prices were down by 4.7% from a year ago when prices started growing because of the Russian invasion of Ukraine. It was the first annual drop in gasoline prices since January 2021.

Statistics Canada says if we exclude food and energy from the calculation, we’ll see that prices in February rose by 4.8% from a year earlier, following a 4.9% annual increase in January.

The annual inflation rate reached its peak of 8.1% last June, but it has been going down since then.

The central bank, which is working to get the overall inflation back to its target level of 2%, kept its overnight rate at 4.5% this month, marking the first time of no changes since it started raising the rate in 2022 in an attempt to restrain the prices growth.

The report says the average of the three core measures of inflation thoroughly monitored by the Bank of Canada slowed down to 5.37% last month, following 5.57% seen in January.