Canada’s inflation rate cooled slightly in January, offering encouraging news for homeowners, buyers, and anyone watching interest rates closely.
According to Dr. Sherry Cooper, Chief Economist at Dominion Lending Centres, the Consumer Price Index (CPI) rose 2.3% year over year in January, down from 2.4% in December. While it is only a modest decline, it signals continued easing in inflation pressures across the country.
As a Lethbridge Mortgage Broker and Alberta Mortgage Broker, I closely monitor these economic updates because inflation plays a direct role in where mortgage rates move next.
Below is a breakdown of what this means and how it could impact Alberta homeowners and buyers.
What Drove Inflation Lower?
Dr. Sherry Cooper reports that the primary contributor to lower headline inflation was gasoline prices.
- Gas prices fell 16.7% year over year in January
- This followed a 13.8% drop in December
- The larger decline was mainly due to base-year effects
When excluding gasoline, CPI actually rose 3.0%, matching December’s increase.
Core inflation measures — the Bank of Canada’s preferred gauges — also eased to their lowest levels in a year:
- Median inflation edged down to 2.5%
- Trimmed mean inflation fell to 2.4%
This continued deceleration is important for interest rate expectations.
Where Prices Are Still Rising
While overall inflation eased, several categories experienced notable year-over-year increases:
- Restaurant meals: +12.3%
- Alcoholic beverages (store purchases): +7.9%
- Alcohol served in licensed establishments: +9.0%
- Toys and hobby supplies: +8.7%
- Children’s clothing: +6.3%
These increases were partly influenced by comparisons to January 2025, when prices were temporarily lower due to the GST/HST break.
Meanwhile:
- Grocery prices rose 4.8% year over year
- Fresh fruit prices actually declined 3.1%
- Shelter cost growth slowed to 1.7% — the first time below 2% in nearly five years
Slower rent growth and easing mortgage interest costs contributed to the moderation in shelter inflation.
What About Mortgage Rates?
Despite easing inflation, Dr. Sherry Cooper notes that this report alone is unlikely to trigger a Bank of Canada rate cut at its March 18 meeting.
The Bank of Canada previously held its policy rate at 2.25% for the second consecutive meeting and has expressed caution about stimulating demand too quickly.
Governor Tiff Macklem has warned that cutting rates during a supply-side shock could reignite inflation pressures.
In other words, inflation is improving, but the Bank is not ready to declare victory.
What This Means for the Alberta Housing Market
Greater clarity around the future of the Canada–Mexico–United States (CUSMA) trade agreement will be key for economic stability. Reduced uncertainty is expected to support housing activity, especially in regions heavily impacted by tariffs.
For Alberta buyers and homeowners, this environment means:
- Fixed rates remain influenced by bond markets
- Variable rates depend on Bank of Canada policy
- We are in a holding pattern while inflation continues to moderate
If inflation continues trending downward, the case for rate cuts strengthens later in 2026.
Why This Matters for You
If you are:
- Renewing your mortgage
- Considering refinancing
- Purchasing your first home
- Moving up or investing in Alberta real estate
Understanding inflation trends is critical.
As a Lethbridge Mortgage Broker and Alberta Mortgage Broker, I help clients interpret these economic signals and lock in the right mortgage strategy at the right time.
Every rate decision should be made with context — not just headlines.
Bottom Line
Canadian inflation has cooled to 2.3%, and core measures continue to ease. While this is positive news, it is not yet enough to prompt immediate Bank of Canada rate cuts.
We are seeing progress — but patience remains necessary.
All economic data and analysis in this article are credited to:
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca
Let’s Talk About Your Mortgage Strategy
If you want to discuss how inflation and interest rates affect your mortgage:
Dillan Kelly
Lethbridge Mortgage Broker
Alberta Mortgage Broker
Dominion Lending Centres Mortgage Excellence
📞 403-894-5818
🌐 https://dkmortgageteam.ca
Whether you are buying, refinancing, or renewing, I would be happy to walk you through your options and build a strategy that fits your goals.
Let’s make a smart move together.
