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The End of Inflation?

Research Weekly Insights End of Inflation Hero

Inflation is Over! Isn’t It...?

Finally: the Consumer Price Index (CPI), for the first time in years, was below three percent in Canada. It’s a remarkable drop from over eight percent just last summer. Let the rates cuts begin! Charge up the CRE investment sales market!

Hold on... there are many types of CPI. The CBC summarized it well:

  • ”If gasoline is stripped out of the data, the headline inflation rate would have been four per cent. If food is stripped out, the inflation rate would have been 1.7 per cent. If mortgage costs aren't counted, the rate would have been two per cent. Those are great examples of why the central bank pays less attention to the headline number.”
The Bank does NOT use the headline CPI but instead has ”three preferred measures of core inflation to help assess underlying inflation in Canada. ”Common CPI” is arguably the best of them: it’s less volatile, doesn’t exclude anything, and doesn’t rely on ”seasonal adjustment.”

So what is ”common” CPI telling us? That we haven’t made as much progress as think. As you can see in the chart, headline CPI has dropped to near-normal levels (the 10-year average for CPI is 2.3%). But ”common” CPI has a much less impressive decline from 5.9% to... 5.1%. If you’re wondering why the Bank is hesitating on those rate cuts, I think this is a big part of the story.

Research Weekly Insights End of Inflation Graph


”Headline” inflation has declined dramatically, but ”common” inflation remains at double the level of June 2021 with minimal declines. The Bank of Canada considers various measures of inflation in their rate policy decisions. 


Pour plus d’informations, veuillez contacter:

Adam Jacobs

Head of Research | Canada

Toronto Downtown

Colliers Canada's head of research, leading a cross-country team of 20 mapping, analytics and research professionals. Formerly head of Canada research at Cushman Wakefield and Director of Analytics at Oxford Properties. Featured in mainstream publications such as the Toronto Star, industry publications and podcasts. Specializing in the big picture and the fundamentals driving real estate - demographics, the macro environment and the global economy. 

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