The annual rate of inflation slowed to 6.3% in December 2022, according to Statistics Canada, as consumers paid less for gasoline and found modest relief at supermarkets.
Month-on-month inflation eased to 0.6% after rising 0.1% in November. This is the biggest monthly decline in inflation since the start of the COVID-19 pandemic in April 2020.
December’s headline inflation figure marks a deceleration from November’s inflation rate of 6.8%. The decline exceeded the consensus of economists, who had expected a decrease of 0.4 percentage points from last month.
The agency pointed to a drop in prices at gas pumps as inflation moderated last month. Motorists paid 13.1% less month-on-month, which was also the biggest drop on record since April 2020, according to Statistics Canada.
Food prices rose 11% in the month, although this also decreased from 11.4% in the previous month.
While Statistics Canada reported slower price growth among staples such as bakery goods (13.5% versus 15.5% in November) and coffee and tea (13.2% versus 16.8% in November), the agency said pressure on fresh vegetables continued in December Last month, prices rose by 13.6% compared to 11.7% in November.
Statcan attributed the increase on bad weather in production areas.
The prices of durable goods have also come down drastically. Appliance prices fell 4.1% month-on-month, the biggest decline on record, while furniture prices also rose at a slower pace than in November.
The agency attributed the slowdown to the easing of supply chain restrictions and reduction in shipping costs, as well as lackluster consumer demand.
Statistics Canada pointed to a possible drop in demand for used cars as annual growth in passenger car prices slowed for the third month in a row.
Meanwhile, rising interest rates from the Bank of Canada put pressure on the mortgage interest cost index, which rose to 18% for the month from 14.5% in November.
Inflation rose in the first half of 2022 before peaking at 8.1% in June, and has since declined gradually.
According to StatCan, the pressure on prices was “broad”, with the largest increases recorded in transportation (+10.6%), food (+8.9%) and housing (+6.9%).
Energy prices rose 22.5% for the full year, leaving Canadians to face inflation through 2022.
According to the agency, food prices are projected to increase by an average of 10% through 2022, the fastest annual pace recorded since 1981.
Extreme weather conditions, rising input costs and supply chain disruptions related to the Russian invasion of Ukraine were the main reasons for food inflation last year.