The Bank of Canada dismantled inflation
Canada's annual inflation rate continued to slow in February, proving the central bank's decision to keep its key rate steady.
Statistics Canada reported that the country's inflation rate rose 5.2% year-over-year in February, the biggest slowdown since April 2020.
This value equaled the annual inflation rate of 5.9 percent in January 2023 and was the lowest since January 2022, when the rate was 5.1 percent.
The Bank of Canada is hopeful that inflation will continue to slow and not have to raise interest rates further. On March 6, the central bank left its key interest rate unchanged at 4.5%, the first hold since it began raising rates last year.
The Bank of Canada has been focused on getting inflation back to its 2% target. Rising rates over the past year are beginning to slow the economy, that makes people and businesses to cut back on spending.
Economist Douglas Porter said, "The Bank of Canada is likely “breathing a big sigh of relief looking at the February inflation data. This very much supports their decision to stop raising interest rates."
He also noted that the slowdown in inflation over the past few months has been driven by significant declines in energy prices. “The next part of the inflation fight is going to be a little bit more of a challenge getting inflation from around five per cent to maybe back below three per cent,” he said.
Nevertheless, despite easing overall inflation, prices for food purchased in February were up 10.6 percent from a year earlier. This is the seventh consecutive month of double-digit growth.
Canadian Imperial Bank co-director Karyne Charbonneau said she expects overall inflation to fall below 3% by May, but warns that continued food price increases are likely to keep the annual rate "at 2-3% for the second half of the year."
