Inflation took a surprise dip to 2.8 per cent in February, even though most analysts were expecting it to climb because of higher energy prices. Anne Gaviola has more on what drove this break for household budgets and what this all means for the Bank of Canada.
Shelter price inflation remains the biggest fuel in overall inflation, which cooled further to 2.8 per cent year-over-year in February. Shelter prices accelerated to 6.5 per cent annual growth last month, up from 6.2 per cent in January, thanks to rising rents and mortgage costs.that the Bank of Canada likely does not want to lower interest rates during the spring housing market, as cheaper borrowing costs could fuel an uptick in real estate activity and inadvertently drive up shelter inflation.
But given the other factors fuelling shelter inflation – namely rent hikes and other housing costs like property taxes, insurance and repairs – the governing council indicated that it wouldn’t be looking past these sources of inflationary pressure.
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