Economists predict that Canada's inflation rate may have risen last month, but they believe there is no need to sound the alarm as long as price pressures ease. Statistics Canada is set to release its December consumer price index report on Tuesday, looking at the headline inflation rate in 2023. Forecasters expect December's rate to come in higher than November's 3.1 per cent. CIBC Bank has predicted inflation rate of 3.4%, which is the result of the impact of gasoline prices.

The report of the United States Department of Labor this week showed that December inflation in this country was accompanied by an increase and reached 3.4 percent. This increase in inflation from the rate of 3.1% in November was caused by the increase in the cost of housing as well as the price of energy and food. TD Bank Chief Economist James Orlando expects December inflation to be 3.3 percent. Food inflation is also expected to continue slowly. Food prices have been increasing at a slower pace for the past few months and in November, they increased by 4.7% compared to the same period of the previous year.

As inflation continues to ease, the central bank decided to keep its key interest rate steady at five percent in autumn 2023. Economists widely expect the central bank to cut interest rates this year once inflation reaches its two percent target. The head of the central bank, Tif Maklam, announced that the central bank does not need two percent inflation to reduce rates, but it needs evidence to show that it is moving steadily in this direction.

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