As Canada’s headline inflation falls to 5.9 percent in January, food prices will continue to rise.

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 reported Tuesday that Canada’s January inflation rate fell to 5.9 percent. (THE CANADIAN PRESS/Christopher Katsarov)

Statistics Canada announced Tuesday that Canada’s inflation rate dropped to 5.9 Percent in January. This was due primarily to higher gasoline prices, rising mortgage interest rates and stubbornly high food costs.

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 bank’s most aggressive in its history. The Bank of Canada has increased its benchmark rate by 425 base points since March 2022. This brings the rate to 4.5%. Tiff Macklem, Bank of Canada Governor, stated that the pause was “conditional upon economic developments coming in line with our forecast.”

Canada’s January employment growth was 150,000, surpassing 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 works as a senior reporter for Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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