Consumer Price Index (Jan.)

January's increase in consumer price inflation, to 2.5% from 2.3%, is mostly a reflection of some recent noise in new motor vehicle and electricity prices. Since these prices are also included in the official definition of core CPI inflation, that also nudged higher as well, to 2.1% from 1.9%. We still expect underlying inflation to drift lower in the coming months, as slower economic growth pushes the unemployment rate even higher. As such, we are sticking with our call that the Bank of Canada is likely to lower interest rates before the end of the first half of this year.