It is predicted that the increase is unlikely to stress out the Bank of Canada, which announced to maintain low interest rates. According to a few economists, the next increase in interest rates would take place in early 2013.
According to the Bank of Canada Governor Mark Carney, inflation rate will drop below his 2 percent target in the next quarter since the economy will keep functioning below its potential into 2013.
“It’s a still a bit of a dovish story,” said Derek Holt, Scotia Capital’s VP of economics in Toronto. “This restores some sanity to the print we had in the last report.”
The increased annual interest rate does not mean all items cost more in January. Furniture cost 3.6 percent less than in December 2011 and video equipment plunged 9.7 percent. Mortgage interest costs and travel tours were also somewhat less costly.
Reportedly, most of the inflation happened in Ontario and Quebec. While considering the regions, the highest increase was reported in New Brunswick at 3.2 percent and lowest in British Columbia, at 1.7 percent.
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