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Tax break curbed inflation

The Canadian government introduced an HST/GST tax break on Dec. 14, which removed tax from restaurant and grocery-prepared meals, children’s clothing and toys, books, and video games.

“With the federal tax break ending on Feb. 15, the GST and HST were reapplied to eligible products,” Statistics Canada said in its report. “This put upward pressure on consumer prices for those items, as taxes paid by consumers are included in the Consumer Price Index.”

Watching inflation

The Bank of Canada governor Tiff Macklem uses the inflation rate as a guide for where he pinpoints the interest rate.��

“Inflation is a measure of how much prices for goods and services are rising over a given period of time,” the . “The economy works best when inflation is stable and predictable.”

In the early days of the pandemic, as people were sent home to work and spent less money on commuting and travel, it left more discretionary cash in their pockets.

People purchased new homes, did renovations or upgrades to their spaces. As big-ticket purchases increased, the cost of goods also went up with demand, which led to higher inflation.

“Purchasing power — our ability to buy products and services with the money we have — weakens,” the bank said. “That’s how high inflation hurts an economy; people can’t buy as much and the economy starts to slow.”

In order to stabilize the economy, Macklem raised interest rates up to 5 per cent, which was successful in stabilizing inflation, bringing it back down to the two-per-cent range.

That was followed by a number of interest rate decreases, with Macklem announcing the latest one Wednesday, March 12.

More expensive purchases

However, it looks like the economy is still slowing and prices are increasing.

Prices for travel tours to the United States rose from 2024 levels, and gasoline prices increased in February. The cost of groceries also went up in February.

Statistics Canada’s food price index shows milk cost $5.31 in January, a loaf of white bread was $3.44. Milk is now $5.36 and bread is $3.47.

Tariffs not reflected

What isn’t in the equation in February are the tariffs imposed by the United States government.

However, Statistics Canada is keeping a watchful eye.

“The imposition of tariffs by the United States and/or countermeasure tariffs by the Canadian government will have an impact on prices paid by Canadian consumers in the coming months,” Statistics Canada said.

The next inflation update is expected April 15, which will highlight March figures. To learn more, visit .