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OTTAWA — Canada’s annual inflation rate unexpectedly fell to 2.8 per cent last month, amid sharp declines in cellular and internet services as well as slower grocery price growth.
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Statistics Canada released its February consumer price index report Tuesday, which shows price growth softened for a second consecutive month.
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Economists were widely expecting Canada’s inflation rate to have risen above January’s 2.9 per cent, in part due to higher gasoline prices.
The federal agency says prices for wireless services were down 26.5 per cent and internet prices fell 13.2 per cent from a year ago.
Prices for food purchased at stores in February were up 2.4 per cent from a year ago, marking the first time prices grocery prices rose more slowly than overall inflation since October 2021.
However, that’s little relief to Canadians who continue to pay significantly higher prices for food than they did a few years ago. The federal agency says grocery prices increased 21.6 per cent between February 2021 and February 2024.
Meanwhile, housing costs continue to put upward pressure on inflation, with mortgage interest costs up 26.3 per cent and rent up 8.2 per cent annually.
Still, Tuesday’s report offers good news to the Bank of Canada, which is looking for more evidence that inflation is sustainably headed back to the country’s two per cent target before it moves to lower interest rates.
The central bank’s preferred core measures of inflation, which strip out volatility in prices, also fell last month.
Economists have been widely expecting the Bank of Canada to begin cutting its key interest rate in June.
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