{"id":12940,"date":"2025-01-22T13:40:19","date_gmt":"2025-01-22T18:40:19","guid":{"rendered":"https:\/\/economicherald.net\/?p=12940"},"modified":"2025-01-22T13:40:22","modified_gmt":"2025-01-22T18:40:22","slug":"canadas-inflation-slows-to-1-8-raising-rate-cut-hopes","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=12940","title":{"rendered":"Canada\u2019s Inflation Slows to 1.8%, Raising Rate Cut Hopes"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">What Happened<\/h2>\n\n\n\n<p>Canada&#8217;s annual inflation rate eased to 1.8% in December, down from 1.9% in November, as a government sales tax break lowered prices on alcohol, restaurant food, and children&#8217;s clothing. Monthly consumer prices declined by 0.4%, according to Statistics Canada.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why It\u2019s Important<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rate Cut Expectations:<\/strong> The Bank of Canada (BoC) has already cut interest rates by 175 basis points since June, and December\u2019s inflation slowdown increases the likelihood of another 25 basis-point cut at the Jan. 29 meeting.<\/li>\n\n\n\n<li><strong>Temporary Tax Relief:<\/strong> A tax break that took effect mid-December contributed to the lower inflation rate by reducing prices on about 10% of the Consumer Price Index (CPI) basket.<\/li>\n\n\n\n<li><strong>Market Impact:<\/strong> The Canadian dollar weakened by 0.90% to 1.4435 against the U.S. dollar as traders bet on further monetary easing.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Key Details<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Alcohol and Restaurant Prices:<\/strong> Prices for alcoholic beverages fell 1.3% year-over-year in December, compared to a 1.9% rise in November, while restaurant food prices dropped 1.6% after a 3.4% increase the prior month.<\/li>\n\n\n\n<li><strong>Shelter Inflation:<\/strong> Rent and mortgage costs rose 4.5% annually, remaining elevated despite a slight decline from the previous month.<\/li>\n\n\n\n<li><strong>Gasoline Prices:<\/strong> Year-over-year gasoline prices rose 3.5% after falling 0.5% in November, largely due to a base-year effect.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Outlook and Market Reaction<\/h2>\n\n\n\n<p>Canada\u2019s core inflation measures, CPI-median and CPI-trim, both edged closer to the BoC\u2019s 2% target, further supporting expectations of a rate cut next week. CPI-median eased to 2.4%, while CPI-trim declined to 2.5%.<\/p>\n\n\n\n<p>Analysts at CIBC Capital Markets believe underlying price pressures are stabilizing around 2%, reinforcing expectations for a 25 basis-point rate reduction. However, BoC Governor Tiff Macklem has signaled that further cuts will be gradual.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What Happened Canada&#8217;s annual inflation rate eased to 1.8% in December, down from 1.9% in November, as a government sales tax break lowered prices on <a href=\"https:\/\/economicherald.net\/?p=12940\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":4,"featured_media":12941,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[3047,3051,3046,3044,3052,3049,973,3045,3050,3048],"class_list":["post-12940","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-bank-of-canada-rate-cut","tag-boc-monetary-policy","tag-canada-economic-outlook","tag-canada-inflation","tag-canada-interest-rates","tag-canadian-dollar","tag-consumer-price-index","tag-cpi-canada","tag-statistics-canada","tag-tiff-macklem"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - 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