Canada's inflation rate cooled to 5.2% in February, the largest deceleration since April 2020, data showed on Tuesday, backing the central bank's plans to hold off on further interest rates hikes.
According to Canada’s national statistics office, the consumer price index in February was up 5.2% compared with a year earlier. The reading stacked up favourably with an annual inflation rate of 5.9% in January and was the lowest annual inflation rate since January 2022 when it was 5.1%.
However, the overall cooling didn’t extend to grocery prices which remained stubbornly elevated and outpaced overall inflation.
Grocery prices remain sky high
“Food purchased from stores rose 10.6% year over year in February, marking the seventh consecutive month of double-digit increases,” reported Statistics Canada.
“Continuing to put upward pressure on grocery prices are supply constraints amid unfavourable weather in growing regions, as well as higher input costs such as animal feed, energy and packaging materials.”
The federal agency noted that prices for some food items such as cereal products had shot up 14.8%, sugar and confectionary items were 6.0% more expensive, while fish, seafood and other marine products cost 7.4% more on a year-over-year basis in February this year.
In addition, prices for fruit juices were up 15.7% year-over-year in February, following a 5.2% gain in January. “The increase was led by higher prices for orange juice, as the supply of oranges has been impacted by citrus greening disease and climate-related events, such as Hurricane Ian,” noted Statistics Canada.
Energy prices fall
In February, energy prices fell 0.6% year-over-year, following a 5.4% increase in January. Gasoline prices (-4.7%) led the drop, the first yearly decline since January 2021. The year-over-year decrease in gasoline prices is partly the result of a base-year effect, as prices began to rise rapidly in the early months of 2022 during the Russian invasion of Ukraine, said Statistics Canada.
On a monthly basis, Canadian drivers paid 1.0% less for gasoline in February amid higher crude oil inventory levels within the United States. Meanwhile, prices for fuel oil and other fuels rose at a slower pace year over year in February (+24.3%) compared with January (+36.5%).
Regional highlights
In reginal highlights, Statistics Canada pointed out that year-over-year, prices rose at a slower pace in February compared with January in nine provinces. Prices in British Columbia were unchanged compared with January, with lower energy prices offset by higher prices for rent which went up by more than 8.1%.
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