Canada's inflation rate eases to 2.8% in February, Statistics Canada reveals

Canada's inflation rate saw a slight deceleration in February, with the Consumer Price Index (CPI) rising 2.8% year-over-year, down from a 2.9% increase in January.

 

According to the latest data released by Statistics Canada, the deceleration in the inflation rate was influenced by several factors, including lower prices for cellular services, food purchased from stores, and Internet access services. However, this was partially offset by a slight increase in gasoline prices, which rose 0.8% in February following a 4.0% decline in January.

 

Excluding gasoline, the headline CPI slowed to a 2.9% year-over-year increase in February, a decrease from 3.2% in January. Rent and mortgage interest costs continued to exert upward pressure on the overall CPI.

 

On a monthly basis, the CPI rose 0.3% in February, an increase from 0.0% in January. The largest contributors to this monthly increase were higher prices for travel tours and gasoline. When adjusted for seasonal variations, the monthly CPI rose by 0.1% in February.

 

In the telecommunications sector, consumers experienced significant price drops. Those who signed up for a cell phone plan in February paid 26.5% less compared to the previous year, following a 16.4% decline in January. This decrease was attributed to lower prices for new plans and increased data allowances for some cellular service plans. Similarly, prices for Internet access services fell by 13.2% year-over-year in February, mainly due to promotional offers from service providers.

 

Grocery inflation continued to ease in February, with a 2.4% year-over-year increase compared to 3.4% in January. This slowdown was broad-based, with prices for fresh fruit, processed meat, and fish declining, while other food categories like cereal products and dairy products also saw decelerated price growth. Notably, February marked the first month since October 2021 where grocery price growth was slower than the overall headline inflation rate. This trend is partially attributed to a base-year effect, as food prices had risen sharply in February 2023 due to supply constraints and higher input costs.

 

Despite the recent slowdown, grocery prices have increased by 21.6% from February 2021 to February 2024, indicating that prices remain elevated.

 

Gasoline prices saw a year-over-year increase of 0.8% in February, following a decline in January. On a monthly basis, gasoline prices rose by 4.0% in February, driven by higher global crude oil prices and expectations of extended production cuts by some oil-producing countries.

 

The travel and tourism sector also experienced price increases, with consumers paying 4.8% more for travel tours in February compared to January. This increase was due to seasonal demand for travel to destinations in the United States, Mexico, and the Caribbean.