Statistique Canada reported this morning that the Consumer Price Index (CPI) rose by 1.8% year over year last month. This represents a slight decline from the 1.9% increase observed in November (see chart below).
The agency notes that the products that contributed most to the slowdown in inflation were restaurant food and alcoholic beverages purchased in stores. However, these items are among those that benefited from the temporary GST/HST holiday that came into effect on December 14. The CPI excluding food rose from 1.9% in November to 2.1% in December.
These are therefore mixed signals regarding the underlying trend in inflation, which makes it even more difficult to anticipate the Bank of Canada’s decision on its policy interest rate next week.