Canada’s annual inflation rate increased to 3.4% in December after remaining stable at 3.1% for October and November, according to data released on Tuesday from Statistics Canada.
The cost of fuel, rent, air travel and passenger vehicles were responsible for the increase last month.
Prices at the grocery store also went up by 4.7% compared to last year, the same rate increase as November.
The 3.4% increase was “largely the result of higher year-over-year prices for gasoline in December compared with November,” reads the release.
A drop in gas prices helped to bring inflation down last month, but they were even lower in December 2022, leading to what is known as the “base-year effect,” where comparing present figures to the previous year shows a wider gap.
The latest inflation rate increase is much higher than the Bank of Canada’s target of getting inflation back down to 2%.
Since the beginning of 2022, the central bank has raised interest rates 10 times in an effort to reduce high inflation rates.
Most economists expect the Bank of Canada will reduce its rate sometime later this year, however the central bank’s governor Tiff Macklem said it’s too early to confirm such predictions.
“I know it’s tempting to rush ahead to that discussion. But it’s still too early to consider cutting our policy rate,” said Macklem last year.
The Bank of Canada is expected to unveil its next overnight rate target on January 24, 2024.
