Canada’s Annual Inflation Rate Rose to 3.4% in December: StatCan

Gas prices are displayed at a Shell station in Newcastle, Ont., on Feb. 2, 2022. (The Canadian Press/Doug Ives)

The annual inflation rate rose to 3.4 percent in December, up from 3.1 percent in November, according to Statistics Canada.

The increase was a reflection of higher gasoline prices compared with a year ago, the federal agency said in its consumer price index (CPI) report released Jan. 16. The price of gas increased 1.4 percent year-over-year in December, despite being on the decline during the previous four months. The price of air travel, passenger vehicles, and rent also contributed to the uptick in the inflation rate.

The increase was predicted by economists, who attributed the change to a base-year effect, which refers to how price movement from the previous year impacts the calculation of overall inflation.

With gasoline excluded from the equation, however, the consumer price index slowed to 3.5 percent in December compared to 3.6 percent in November.

The agency said the average annual inflation rate for 2023 sat at 3.9 percent, a dip from the 40-year high of 6.8 percent in 2022. Excluding 2022, however, it is the highest it’s been since 1991.

StatCan said price growth in 2023 slowed in six out of eight components of the consumer price index compared with 2022.

Food

Grocery prices in December rose 4.7 percent from the previous year while annual food prices rose 7.8 percent in 2023. While the increase was not as high as the 9.8 percent prices rose in 2022, it was still larger than the annual average increase in the all-items CPI.

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The grocery products with the largest price increases were edible fats and oils which rose 16.9 percent, preserved fruit and fruit preparations up 11.5 percent, bakery products up 10.7 percent, cereal products up 10 percent, and preserved vegetable and vegetable preparations, which rose 9.7 percent.

Housing

Higher borrowing costs led to a faster annual average price growth for both mortgage interest costs and rent.

The mortgage interest cost index rose 28.5 percent last year, the largest increase on record, influenced by mortgages being initiated or renewed at higher interest rates.

Renters, meanwhile, paid 6.5 percent more in 2023 on top of the 4.6 percent increase from 2022.

“In addition to increased immigration, a higher interest rate environment may have stimulated rental demand by increasing the potential cost of homeownership,” the report said.

Regional Variations

Nine provinces saw faster price growth last month compared to November. Newfoundland’s CPI rose from 2.1 percent in November to 3.4 percent in December while PEI’s jumped from 0.4 percent to 2.6 percent and Nova Scotia’s went from 2.5 percent to 3.6 percent. In New Brunswick, the CPI went from 1.7 in November to 2.9 last month.

Quebec and Ontario had much smaller increases going from 3.6 percent to 4 percent and 3.3 percent to 3.4 percent respectively. Manitoba’s decreased, going from 1.8 percent to 1.7 percent.

Saskatchewan’s CPI changed from 2.3 percent to 2.7 percent, while Alberta’s rose half a percentage point from 2.5 percent to 3 percent. B.C.’s went from 3.2 percent in November to 3.4 percent in December.