Canada: Inflation continues to rise in January
Consumer prices increased a seasonally-adjusted 0.55% in January over the previous month, picking up from the 0.28% increase registered in December. The reading was driven by rising prices for transportation.
Inflation edged up to 5.1% in January, following December’s 4.8%. January’s figure marked the highest inflation rate since September 1991. Annual average inflation rose to 3.7% in January (December: 3.4%). Lastly, core inflation rose to 4.3% in January, from December’s 4.0%.
Commenting on the latest inflation reading, Andrew Grantham, senior economist at CIBC World Markets, noted:
“Unfortunately, this may not be the peak for inflation, with further evidence of building price pressures so far in February. With gasoline prices rising further in the first half of this month, a big dairy price increase hitting at the start of February, and the possibility of supply chain issues stemming from recent protests, headline inflation could push further above the 5% mark before finally starting to moderate thereafter. The broadening of price pressures provides plenty of justification for the Bank of Canada to start moving interest rates higher at the next meeting, despite the Q1 hit to economic growth from the Omicron wave.”