The December Consumer Price Index (CPI) report revealed a continued slowdown in inflation, with the headline rate reaching its lowest point since February 2021.
The drop was also aided by the federal government’s temporary GST/HST holiday that started on December 14, with the exemption continuing for the full month of January.
The Bank of Canada’s preferred core inflation measures continued to ease on an annual basis in December but increased compared to November. As a result, their three-month averages rose and remain above the Bank’s neutral target range.
December inflation report highlights
| November 2024 (YoY) | December 2024 (YoY) | 3-mo annualized |
|---|
| Headline CPI | 1.9% | 1.8% | 2.8% |
| CPI-Median | 2.6% | 2.4% | 3.4% |
| CPI-trim | 2.6% | 2.5% | 3.7% |
| Shelter | 4.6% | 4.5% | 5.1% |
| Rent | 7.1% | 7.7% | |
| Mortgage interest cost | 13.2% | 11.7% | 7.2% |
What economists are saying
Following the release of the inflation report, here’s what some of Canada’s top economists had to say:
…core inflation pressures have picked up over the past three months, suggesting that inflation readings are likely to move up a bit in the months ahead. This will give the Bank of Canada reason to adopt a more gradual pace of interest rate cuts this year. We expect a quarter point cut at every other decision in 2025.
”BMO (Douglas Porter): “We believe that the heavy overhang of trade uncertainty—possible U.S. tariffs—overrides almost all else. As a result, we suspect that today’s reading is just good enough to allow the Bank of Canada to trim next week, for risk management purposes.”
With most other lenders agreeing the likely Bank of Canada decision will be a .25% drop come the next rate decision
Only time will tell and a new president in the US can always cause a couple surprises