Total CPI inflation is expected to fall below 2 per cent in the short term, as a result of lower gasoline prices, while core inflation is expected to remain around 2 per cent. Canada’s relatively favourable economic performance continues to rely significantly on the resilience of Canadian household spending, supported by very accommodative monetary policy and a well-functioning financial system.
Our economy cannot, however, depend indefinitely on debt-fuelled household expenditures, particularly in an environment of modest income growth. Notably, housing investment rose further in the first quarter, accounting for an unusually elevated share of the overall Canadian economy. In this context, Canadian authorities are co-operating closely to monitor the financial situation of the household sector, and are responding appropriately.