Released: 2023-02-21

The Consumer Price Index (CPI) rose 5.9% year over year in January, following a 6.3% increase in December. Prices for cellular services and passenger vehicles contributed to the deceleration in the all-items CPI. However, mortgage interest cost and prices for food continue to rise.

In January, prices rose 4.9% on a year-over-year basis excluding food and energy and 5.4% excluding mortgage interest cost. In both cases, year-over-year price growth slowed compared with December.

The headline CPI grew at a slower pace year over year in January (+5.9%) compared with December (+6.3%) due to a base-year effect. This is because the monthly increase in January 2023 (+0.5%) was smaller than the monthly increase in January 2022 (+0.9%). In January 2022, mounting tensions amid the threat of a Russian invasion of Ukraine coupled with supply chain disruptions and higher prices for housing put upward pressure on prices.

On a monthly basis, the CPI rose 0.5% in January 2023 following a 0.6% decline in December. Higher gasoline prices contributed the most to the month-over-month increase, followed by a rise in mortgage interest cost and meat prices. On a seasonally adjusted monthly basis, the CPI rose 0.3%.

Chart 1
12-month change in the Consumer Price Index (CPI) and CPI excluding food and energy

Infographic 1
Slowdown in headline inflation reflects a base-year effect following strong price increases in January 2022 

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Prices rise at a slower pace in January in all major components except food and health and personal care

Consumers pay more at the pump in January compared with December

Gasoline prices contributed the most to the month-over-month increase in the all-items CPI, rising 4.7% in January. The price increase was related to refinery closures in the southwestern United States following winter storm Elliot.

On a year-over-year basis, prices for gasoline rose 2.9% in January, decelerating slightly from a 3.0% increase in December.

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Gasoline prices increase month over month

Consumers pay less for cellular services

Cellular service prices fell 7.9% on a year-over-year basis in January, following a 2.5% increase in December. Some Boxing Day sales remained available into January, leading to a decline when compared with the same month a year earlier.

Year-over-year passenger vehicle prices increase at a slower rate

Year over year, consumers paid 6.2% more for passenger vehicles in January following a 7.2% increase in December. This slowdown in price growth is partly attributable to a base-year effect, caused by a 0.9% month-over-month increase in January 2022, when prices were impacted by ongoing supply chain constraints. In comparison, vehicle prices declined 0.1% month over month in January 2023. Lower availability of new model-year vehicles in January 2023 compared with January 2022 may also be contributing to the year-over-year deceleration.

Shelter prices decelerate despite continued upward pressure from mortgage interest cost

On a year-over-year basis, shelter prices increased at a slower rate, rising 6.6% in January after a 7.0% increase in December. Growth in other owned accommodation expenses (+1.1%) and homeowners' replacement cost (+4.3%) continued to decelerate amid the ongoing cooling of the housing market.

At the same time, the mortgage interest cost index continued to rise at a faster year-over-year pace amid the higher interest rate environment, rising 21.2% in January, the largest increase since September 1982, following an 18.0% increase in December.

Food prices rise at a faster pace year over year

Food prices, which include both groceries and food from restaurants, rose at a slightly faster pace year over year in January (+10.4%) than in December (+10.1%).

Grocery price acceleration in January was driven in part by year-over-year growth in meat prices (+7.3%), resulting from the largest month-over-month increase since June 2004. Fresh or frozen chicken prices were a notable contributor to the gain, rising 9.0% in January compared with December, the largest monthly increase since September 1986. Among other factors, chicken prices rose amid stronger seasonal demand as well as ongoing supply constraints, elevated input costs and issues related to avian influenza. Additional acceleration was seen in year-over-year price increases for bakery products (+15.5%), dairy products (+12.4%) and fresh vegetables (+14.7%).

Food purchased from restaurants also rose at a faster pace, rising 8.2% in January following a 7.7% increase in December. The gain was the result of higher prices for fast food and takeout.

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Prices accelerate for various food items

Regional highlights

Year over year, prices rose at a slower pace in January compared with December in nine provinces. Price growth slowed the most in Manitoba, the province with the largest deceleration in gasoline prices. At the same time, New Brunswick was the only province where prices rose at a faster pace in January, as price growth for gasoline accelerated the most compared with the rest of the country.

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The Consumer Price Index rises at a slower pace in nine provinces

Lower energy prices in Alberta

Electricity prices in Alberta fell 45.6% in January compared with December, the largest monthly decline on record. The decline follows a provincial initiative to reduce electricity rates and increase the provincial electricity rebate.

Alberta was the only province with a year-over-year decline in gasoline prices (-6 .4%). This reflects the complete suspension of the provincial gas tax starting January 1, following the previous partial suspension.