Canada January CPI - Stronger than US CPI in late 2023, but softer in January
January’s Canadian CPI is significantly softer than expected, falling to 2.9% yr/yr from 3.4%, reaching its lowest since June 2023. In the second half of 2023 Canadian inflation was more stubbornly strong than falling US data, but this data for January combined with a stronger US CPI reduces the contrast.
Unadjusted Canadian CPI was unchanged in January with a 0.1% decline ex food and energy, a rise in food outweighing a drop in energy. The rise in food is seasonal and seasonally adjusted CPI fell by 0.1% overall with a 0.1% rise ex food and energy. The latter is well below trend though we did see 0.1% seasonally adjusted gains ex food and energy in June and September before strength resumed, so January’s soft month does not confirm a change in trend.
Details show seasonally adjusted declines of 1.8% in clothing and footwear, 0.9% in health and personal care and 0.7% in recreation, education and reading, all of which look unlikely to be repeated. Shelter rose by 0.3%, still outperforming the overall pace but slower than most recent months.
The ex food and energy pace is not one of the BoCs core rates, though each of these showed encouraging progress in January, with CPI-common falling to 3.4% from 3.9%, CPI-median to 3.3% from 3.5% and CPI-trim to 3.4% from 3.7%, even if all remain well above the 2.0% target. The average of the three measures at 3.37% is the lowest since November 2022.
