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MNI: Canada Inflation Slows to 6.3% in Dec From 6.8% in Nov

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OTTAWA (MNI)

Canada's inflation rate slowed to 6.3% in December from November's 6.8% as gasoline prices faded, the federal statistics office said Tuesday, the slowest pace in 10 months.

The consumer price index fell 0.6% on a monthly basis, the most since April 2020 in the Statistics Canada report. Both measures were less than an economist consensus for a 0.5% monthly decline and a 12-month gain of 6.4%. Gasoline prices were behind the moderation, falling 13% on the month and the 12-month gain slowing to 3% from 14%.

Core inflation rates also moderated, with the median and trim indexes preferred by the central bank both down a notch to 5% and 5.3%. Consumer prices excluding food and energy also slipped to 5.3%, though these measures all remain well above the Bank of Canada's 1%-3% target band.

This is the last major report before the Bank’s Jan. 25 rate decision and follows stronger-than-expected job growth and the Bank’s survey of firms and households showing record inflation expectations over the next year or two. Governor Tiff Macklem last month hiked the key rate a half point to 4.25%, the seventh straight move, and said going further is a more data dependent decision. Economists before today's report leaned towards a quarter-point hike, suggesting even an inflation slowdown isn't enough for a pause with CPI expected to exceed 2% until the end of next year. 

The Bank's hikes from a record low 0.25% last year are restraining some parts of the economy. Mortgage interest costs jumped 18% from a year ago, the most since 1982, and the associated housing slowdown fostered a record 4.1% monthly drop in household appliance prices.

Other reports show a tight economy, including third quarter GDP growth at about a 3% annualized pace and the unemployment rate near a record low around 5%. Several provincial governments are mailing out new relief checks that make the inflation fight harder.

StatsCan also confirmed inflation rose 6.8% on an annual average basis in 2022, the most since the 10.9% incin 1982. 

MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com
MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com

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