Rising energy costs pushed Canada’s inflation rate up to 1.9% in January, despite a temporary national GST break, according to Statistics Canada.
The increase was largely driven by higher energy prices, which were 5.3% higher than last January. Gas prices jumped 8.6% year-over-year, with Manitoba seeing the largest increase due to the return of the provincial gas tax. Natural gas prices also rose, up 4.8% from last year and 6% month-over-month, with British Columbia experiencing the biggest spike.
How Does This Impact Mortgage Rates?
While inflation remains below the Bank of Canada’s 2% target, core inflation—which the Bank closely watches when making interest rate decisions—rose slightly in January.
- CPI-common increased to 2.2% (up from 2% in December)
- CPI-median rose to 2.6% (from 2.5%)
- CPI-trim climbed to 2.7% (from 2.5%)
With inflationary pressures still present, the Bank of Canada may remain cautious about cutting interest rates in the near term. Mortgage borrowers should keep an eye on upcoming rate announcements.
Shelter Costs Remain a Key Factor
Housing-related costs continue to be a significant driver of inflation:
- Shelter costs increased by 4.5% in January, unchanged from December.
- New vehicle prices also saw a rise of 2.3%, compared to just 0.9% the month prior.
For homeowners and buyers, this means affordability remains a challenge, and locking in the right mortgage strategy is crucial.
What Should You Do?
With inflation fluctuating and interest rates uncertain, it’s more important than ever to have a mortgage strategy tailored to your financial goals. Whether you’re buying, renewing, or refinancing, TopRankinMortgages is here to guide you through the changing landscape.
Ready to get started? Contact us today for a free consultation.
