First National Financial LP®

Residential Market Commentary - Inflation rising, for now

  • First National Financial LP

Canada’s inflation rate started the year with an increase.  The January, headline rate accelerated to 1.0% annually, up from 0.7% in December. 

Statistics Canada says the January jump is largely attributed to higher gasoline prices.  The agency says, in general, future increases will also be driven by energy costs.

The increase is not unexpected.  The Bank of Canada is forecasting further acceleration, but it also says that will likely be temporary.  The Bank does not expect to see inflation sustainably rise to its 2.0% target until 2023.  The BoC does not anticipate intervening with interest rate changes before then.

Core inflation, which the central bank uses to build policy, is somewhat higher than the headline rate, at 1.5%, up from a revised 1.4% in December.  The December rate was adjusted downward from 1.6%, in the January report.

The January Consumer Price Index rose by 0.6% over December.

While inflation and the CPI are creeping higher, home prices are accelerating at a ‘pedal to the metal’ pace.  The Canadian Real Estate Association’s aggregate benchmark price is up 13.5% on an annual basis, to nearly $670,000.00.  The increase is pinned to on-going decline in new listings, which fell more than 13% between December and January.