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Special Report

Canada Inflation Research Brief

March 2023

Cooling Inflation Provides Optimism For
Commercial Real Estate Investment

Price growth decelerates for eighth straight month. Canada’s annual inflation rate reached 5.2 per cent in February, below the market consensus of 5.4 per cent. This measure was down from 5.9 per cent in January, which was the largest monthly drop since April 2020, and is nearly 300 basis points below the June 2022 peak of 8.1 per cent. Although core price pressures remained elevated, with the three-month annualized rate sitting at 3.5 per cent, the fall in headline inflation suggests that annual price growth will average 5.2 per cent this quarter, which is below the Bank of Canada’s forecast of 5.4 per cent. As a result, the Central Bank’s monetary tightening program is balancing supply and demand at a faster pace than originally expected. This provides further support toward the belief that interest rates have reached their peak and that additional hikes are unlikely, despite an extremely tight labour market.

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