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OTTAWA — A temporary federal tax break from early last year is expected to skew upcoming inflation figures, with analysts predicting a noticeable rise in food prices in January’s data.
Statistics Canada is set to release its January consumer price index report Tuesday after shifting the publication date to accommodate a regional holiday. The agency recently adopted a Monday release schedule for inflation data.
A Reuters poll of economists forecasts the annual inflation rate held at 2.4 per cent in January, though some analysts expect a modest increase. RBC estimates inflation could edge up to 2.6 per cent, while Desjardins projects 2.5 per cent, largely reflecting comparisons with a short lived sales tax exemption in early 2025.
The federal government waived the GST on restaurant meals and select household goods and grocery items for two months beginning in mid December 2024. Because January 2025 was the only full month under the tax break, year over year comparisons this January are expected to show stronger price growth in food and dining categories.
Economists also cite higher costs for grocery staples such as coffee and beef, along with increased import expenses linked in part to a weaker Canadian dollar and ongoing trade disruptions with the United States.
The end of the consumer carbon price last April is expected to continue easing gasoline costs, while softer shelter prices may help contain broader inflation pressures.
The Bank of Canada will receive one more inflation reading before its next interest rate decision on March 18. The central bank held its benchmark rate steady in late January amid continued economic uncertainty tied to trade.
In northern Alberta, the Member of Parliament for Fort McMurray Cold Lake has been urging Ottawa to address food inflation since her reelection last April, saying elevated grocery costs remain a concern for families facing high living expenses
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