The Consumer Price Index (CPI) rose 5.2 per cent year over year in February, following a 5.9 per cent increase in January. This was the largest deceleration in the headline CPI since April 2020, reported Statistics Canada on Tuesday.

Gustavo Fring

“The year-over-year deceleration in February 2023 was due to a base-year effect, for the second consecutive month, which is attributable to a steep monthly increase in prices in February 2022 (+1.0 per cent),” said the federal agency.

“Excluding food and energy, prices were up 4.8 per cent year over year in February 2023, following a 4.9 per cent gain in January, while the all-items excluding mortgage interest cost rose 4.7 per cent, after increasing 5.4 per cent in January.

“On a monthly basis, the CPI was up 0.4 per cent in February, following a 0.5 per cent gain in January. Compared with January, Canadians paid more in mortgage interest costs in February, which was partially offset by a decline in energy prices. On a seasonally adjusted monthly basis, the CPI rose 0.1 per cent.”

While inflation has slowed in recent months, having increased 1.2 per cent compared with six months ago, prices remain elevated. Compared with 18 months ago, for example, inflation has increased 8.3 per cent, added StatsCan.

“In the first half of 2022, the global economy was significantly affected by the Russian invasion of Ukraine, and Canadian consumers experienced a significant increase in prices from January to June 2022. Headline consumer inflation increased from 5.1 per cent in January to 8.1 per cent in June 2022. The broad increase in prices in the early months of 2022, led by energy products, had a downward impact on the year-over-year rate of consumer inflation in February 2023, because higher prices from February 2022 were used as the basis for year-over-year comparison,” said the report.

“Price increases observed in the first half of 2022 will continue to fall out of the 12-month price movement. While inflation has slowed in recent months, prices remain elevated. Users should consider the impact of base-year effects when interpreting the 12-month price movement.”

Food purchased from stores rose 10.6 per cent year over year in February, marking the seventh consecutive month of double-digit increases. Continuing to put upward pressure on grocery prices are supply constraints amid unfavourable weather in growing regions, as well as higher input costs such as animal feed, energy and packaging materials, said Statistics Canada.

Karyne Charbonneau, an economist with CIBC Economics, said Canadian inflation started its rapid fall in February, which should continue over the next few months as last year’s large price increases fall out of the annual calculation.
“The decline in the annual rate was largely due to gasoline prices, which did not increase in February this year, but saw a big jump in the same month last year. The monthly increase was mainly due to telephone services, which rebounded from last month, and mortgage interest costs, which are continuing to march higher. Food prices also remain elevated,” she said.
Leslie Preston, Senior Economist, TD Economics, said inflation in Canada continues to cool from its peak pace last year.”There was nothing in today’s inflation report that would move the Bank of Canada off of its pause on interest rate moves,” said Preston.

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)

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