Inflation rate slows to 6.3% — but grocery prices are still nearly twice that

Canada's annual inflation rate cooled to 6.3 per cent in December, its lowest level since February.

Statistics Canada reported Tuesday that the deceleration in the cost of living was mostly due to a 13 per cent decrease in the price of gasoline, which saw its biggest one-month plunge since April of 2020.

The average gasoline price across Canada is now only three per cent higher than it was this time last year, before the Russian invasion of Ukraine turned the global oil market upside down.

Canadians may have gotten some relief from higher prices every time they filled up their car last month, but the same can't be said of the price to fill up a shopping cart with food.

Grocery prices inched up another 0.3 per cent during the month of December, and have increased by 11 per cent year over year. That's a slight slowdown from the 11.4 per cent pace the previous month.

Overall, the cost of living actually declined by 0.6 per cent on a monthly basis from November to December. That's the biggest monthly drop since 2020, and enough to bring Canada's official inflation rate down to its lowest point in almost a year.

It's still more than twice the upper range that the Bank of Canada likes to see, however, which is why economists expect the central bank is likely to raise its benchmark interest rate at least one more time, when it meets to set monetary policy next week.

"While core inflation remains too high ... things look better," CIBC economist Karyne Charbonneau said of the numbers. "Overall, this report is largely as anticipated and we therefore continue to expect the Bank of Canada to raise rates by 25 [points] next week before pausing for the rest of the year."