As Statistics Canada set to release January figures analysts expect inflation to be steady

Statistics Canada is set to release inflation data for January this morning, and most analysts expect little change from the previous month.

Higher shelter costs will likely offset a drop in gasoline prices, economists believe.

A consensus of economists surveyed by Bloomberg are expecting the data will show that the annual rate of inflation was 3.4 per cent in January — exactly where it was in December.

That, said BMO chief economist Douglas Porter, means that the Bank of Canada will likely not be in any rush to start cutting interest rates.

“Our call of a June start now looks a tad dovish,” said Porter in a research note.

The Bank of Canada has raised its key overnight lending rate 10 times since March 2022 as it attempts to bring inflation under control. The overnight rate is now at five per cent, up from 0.25 per cent when the rate hikes began.

The theory is that by making it more expensive to borrow money, consumers and businesses will spend less, driving down prices and slowing the economy.

 

 

While inflation has come down substantially from its peak of 8.1 per cent in June 2022, it’s still higher than the bank’s target of two per cent.

Porter said BMO’s earlier forecast of a full percentage point drop in the Bank of Canada’s overnight rate by the end of the year now looks “positively perky.”

Scotiabank economist Derek Holt agreed that the bank isn’t likely to start cutting immediately.

“The BoC has been clear that it’s in no hurry to adjust policy in either direction,” said Holt, noting that Scotiabank’s estimate is that the annual rate of inflation rose to 3.5 per cent in

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This article was reported by The Star