Inflation fell sharply last month. Will we see spring rate cuts? – National [Video]

The annual rate of inflation across the country eased half a percentage point in January, an unexpected drop that could mark a “pleasant surprise” for consumers and the Bank of Canada alike.

The overall inflation rate was 2.9 per cent in January, the agency said Tuesday. That’s down from 3.4 per cent in December, when it accelerated slightly from the previous month.

Driving the decline were gas prices which fell for the fifth consecutive month, StatCan says. A pause to the provincial gas tax in Manitoba contributed to the decline.

Price growth at the grocery store also cooled significantly, up 3.4 per cent in January compared to 4.7 per cent in months previous. While StatCan says the cooling in food inflation was “broad-based” across aisles in the grocery store, some items including shrimp and prawns, soup and bacon saw year-over-year price drops.

Airfares were cheaper on an annual basis – down 14.4 …