next release. Strip away that noise and the BoC’s preferred core gauges look tame – the three-month annualized average of core median and trimmed-mean inflation fell to 1.2%, the weakest since May 2020.
Why should I care?
For markets: Easier money is creeping into the forecast.
Traders are increasingly penciling in a mid-year BoC cut, especially if upcoming growth prints disappoint. The details matter: shelter is doing more of the disinflation heavy lifting, with rent posting its biggest monthly drop since 2020, and private asking-rent measures have been cooling for a while. If that holds, bond yields and rate-sensitive stocks could end up taking their cues from housing costs as much as from the headline CPI number.
The bigger picture: Trade shocks could muddy the landing.
Cooling inflation doesn’t eliminate outside risks. Desjardins flags the upcoming Canada–US–Mexico Agreement review as a potential source of tariff and supply-chain uncertainty, and goods prices looked a bit firmer in January. Even so, it notes short-term core-goods inflation is still near pre-pandemic norms, suggesting any trade-driven price bumps could be offset by softer pricing elsewhere.