The headline inflation in Canada fell to 5.9 % in January. Food prices are still rising.

The federal consumer carbon price will expand to three Atlantic provinces next summer including the quarterly rebate cheques which aim to prevent households from being worse off financially as a result of the program. A man fills up his truck with gas in Toronto, on Monday April 1, 2019. THE CANADIAN PRESS/Christopher Katsarov

Statistics Canada announced Tuesday that Canada’s January inflation rate was 5.9 percent. (THE CANADIAN PRESS/Christopher Katsarov)

Statistics Canada reported Tuesday that Canada’s January inflation rate fell to 5.9 percent. This was due to rising gas prices, rising mortgage rates, and stubbornly high food prices.

Canada’s inflation rose 6.3% in December due to slower gasoline prices.

The Bank of Canada will consider Tuesday’s inflation data a “conditional suspension” of interest rate increases as it evaluates the impact of its recent tightening cycle. This is the most aggressive in Bank of Canada’s history. The Bank of Canada raised its benchmark interest rate by 425 basis point since March 2022. It now stands at 4.5 percent. Tiff Macklem, Bank of Canada Governor, stated that the pause was “conditional upon economic developments coming in line with our forecast.”

Canada’s labour market added 150,000 new jobs in January, exceeding economist expectations.

Investors are increasing their bets that the Bank of Canada will hike its key lending rate at least once more this summer, delaying any cuts to the rate until next year in the wake of stronger-than-expected economic data.

There are more to come

Alicja Siekierska, a senior reporter at Yahoo Finance Canada, is Alicja Siekierska. Follow her on Twitter @alicjawithaj.

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