Canada's inflation rate fell below 3% in January, bringing it closer to the Bank of Canada’s 2% target, as gasoline prices and airfares declined sharply during the month.
The annual inflation rate declined to 2.9% in January, down from 3.4% in December of last year, according to Statistics Canada.
The biggest contributor to the decline was a 4% drop in gasoline prices from a year earlier. Partly offsetting the decrease in gas prices was a 3.4% annualized increase in grocery prices.
However, in all, price growth declined in five of eight inflation categories during January.
Canada's inflation rate had fallen below 3% in June 2023, dropping to 2.8%, but rebounded in the second half of last year as consumer prices again climbed upwards.
But now, with the economy weakening, inflation is again on the decline.
Airfares fell 23.7% in January from December when prices were elevated during the busy holiday travel season.
At the same time, prices charged for clothing and footwear decreased 3.2% in January from the month before.
The Bank of Canada has held its benchmark overnight interest rate steady at its current level of 5% but is expected to lower rates later this year as the economy weakens and inflation drops.
The central bank's next interest rate decision is scheduled for March 6.
