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The latest on inflation in Canada
Welcome to The Globe’s live blog for the release of December inflation numbers.
Financial analysts on Bay Street expect Canada’s inflation rate likely ticked up last month, forecasting the annual pace of consumer price growth to hit 3.4 per cent in December, up from 3.1 per cent in November.
Key points:
Find updates from our reporters and columnists below.
7:30 a.m.
Market expectations ahead of today’s inflation report release
Canadian investors will get December inflation data before the start of trading. Economists are expecting the annual rate of inflation to edge up to 3.4 per cent in December, from 3.1 per cent a month earlier.
Before the Bell: What every Canadian investor needs to know today
The increase is expected to be partly the result of a smaller decrease in gasoline prices in December, compared with the same month a year earlier.
– Terry Weber
7 a.m.
December inflation report to be released today
Canada’s next inflation report is likely to show a step in the wrong direction. Financial analysts on Bay Street expect that the annual pace of consumer price growth hit 3.4 per cent in December, up from 3.1 per cent in November.
It’s not necessarily a cause for alarm, however. The annual inflation rate will be heavily influenced by what economists refer to as base-year effects. Consumer prices fell sharply between November and December of 2022, creating an unflattering base for year-over-year comparisons.
“Despite the acceleration, this is likely just a temporary increase, as there are more favourable (though not all easy) base effects in the months ahead,” Bank of Montreal economists said in a research note.
As usual, analysts will closely look at core measures of inflation – which strip out volatile components of price growth – for signs of progress. They expect to see a slight easing of inflationary pressure on this front in December.
Bank of Canada officials have repeatedly said that bringing inflation back to their 2-per-cent target would not be a linear journey. In its latest projections, the BoC said that inflation should ebb to roughly 2.5 per cent in the second half of this year, before returning to 2 per cent in 2025.
The central bank will release its next interest-rate decision on Jan. 24 and issue new economic projections. The bank’s benchmark interest rate is 5 per cent – the highest since 2001.
Given the progress in curbing inflation, economists and investors expect the Bank of Canada will start to lower its overnight lending rate by around the middle of the year.
– Matt Lundy
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