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Inflation fell last month. Our GST tax holiday on essential goods is part of the reason - and it's still in effect until February 15. Canada's annual inflation rate fell to 1.8% in December, largely thanks to temporary tax relief from the federal government.
Statistics Canada's consumer price index report released Tuesday said restaurant purchases and store-bought alcohol contributed most to the slowdown.
In mid-December, the federal government implemented a temporary tax reduction on these items, as well as on tobacco and cannabis products, clothing and some toys, among others.
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Without the tax rate, Statistics Canada said the annual inflation rate would have reached 2.3%. Editors' Choice
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Food price growth also slowed last month, falling to 1.9% year-over-year from 2.6% in November. Gasoline price inflation has been high at 3.5% year-over-year.
Housing costs fell slightly in December to 4.5% but remain high, while rental prices also fell year-on-year in December, falling to 7.1%. Attention now turns to the Bank of Canada, which is due to make an interest rate decision next week. Some analysts have called for another quarter-percentage point cut, following a half-percentage point cut in December.
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