Canada Inflation Data

Canada inflation data came out at 5.9% for January VS the estimate of 6.1%.

Although, the headline inflation print has come down 0.4% from the previous month of 6.3%, there are important data metrics to examine which continue to hurt Canadian pockets on a day to day basis. And with the BoC 2% inflation target, we still have a long way to go.

•Core CPI 4.9% YoY (prev 5.3%)

• Food: 10.4% YoY (1.7% MoM)

• Energy: 5.4% YoY (1.3% MoM)

• Goods: 6.4% YoY

• Services: 5.3% YoY

Not everything is slowing

The cost of groceries has risen significantly beyond the general inflation rate, increasing by 10.4 percent. The prices of meat have gone up by 7.4 percent, the largest rise since 2004, while baked goods, dairy products, and fresh vegetables have all seen double-digit increases of 15.5 percent, 12.4 percent, and 14.7 percent, respectively.

In addition, gas prices rose 2.9 per cent in January (year over year). Mortgage interest costs increased at a faster annual pace, increasing 21.2 per cent, the largest increase since 1982.

Mortgage rates and food are 2 items which Canadian households spend the most on, so on average the overhead for most Canadians are going up and with the yield curve inverted -83 basis points, the bond market continues to signal rates staying higher for longer and growth slowing. It is becoming more clear that there will not be any rate cuts this year.

From an investment point of view, paying down debt is anyones best return. And as for investing, cash sitting in a money mart or GIC earning 4–5% is a fantastic risk risk free return.

Thank you for reading,

Wassim