New inflation data just came out in Canada, and if you’re thinking about buying a home, renewing your mortgage, or have been watching interest rates closely, you should check it out. I’m Josh Tagg, a mortgage broker here in Alberta, and this is what I want you to know…

Core inflation is easing more than expected

One of the most important parts of the latest report is core inflation. This measure removes items that jump around a lot, like food and energy, so economists can see the real trend.

Core inflation came in below the Bank of Canada’s target for the second month in a row. That tells us price pressures are cooling faster than expected. When inflation cools, it reduces the need for high interest rates.

Why headline inflation went up

You may have seen that headline inflation ticked up to 2.4%. On the surface, that sounds like inflation is rising again—but why?

Most of that increase came from food prices. Last year’s GST holiday temporarily lowered some prices, and now those prices are normalizing again. That’s a one-time adjustment, not a sign that inflation is taking off.

At the same time, energy prices dropped sharply, and most other categories showed very small monthly changes.

Mortgage interest costs finally declined

This is a big signal for homeowners.

Mortgage interest costs fell in December for the first time since 2021. That’s a sign that earlier interest rate cuts are starting to work their way through the system.

It doesn’t mean payments are suddenly low, but it does suggest the worst pressure from rising rates may be behind us.

Underlying inflation is below target

When economists strip out volatile items, underlying inflation is now running closer to 1.7%. That’s actually below the Bank of Canada’s 2% target.

Add to that recent data showing the economy likely contracted in the fourth quarter, and the risk has shifted. The concern is no longer that rates need to go higher—it’s that rates may be too restrictive for the economy.

What markets are expecting next

Because of this data, financial markets are increasingly pricing in that the Bank of Canada may need to cut rates by up to half a percent this year to support economic growth.

That doesn’t mean cuts are guaranteed, and it doesn’t mean they’ll happen all at once. But it does signal a changing rate environment.

What this means for Alberta buyers and homeowners

For homebuyers, this isn’t a signal to rush into a purchase. It’s a reminder to plan. Getting pre-approved, understanding your payment comfort zone, and knowing your options matters more than trying to time the perfect rate.

For homeowners, this is a good time to review your mortgage. If you’re renewing soon, considering refinancing, or thinking about using home equity, the next 6 to 12 months could bring more flexibility.

The smart move right now isn’t guessing the exact timing of rate cuts—it’s making sure you’re ready when they happen.

If you want help planning your next step, that’s exactly the kind of conversation I have with Alberta homeowners and buyers every day. Contact me!