Not a huge surprise (a little surprise), still CPI for January 2012 is going up again, although a small increase (from 2.3% to 2.5%), underlying this inflation is higher food prices +4.2% and higher gasoline prices +6.5%, and February is looking dodgy on the fuel side, as oil prices (Brent crude hit the $120/bbl yesterday).
So StatsCan shows that inflation that had shown a positive trend for the past few months, is now on a reverse course. Canada's reality is that the economy did relatively well in 2011 with GDP growth of 2.1% (very very early estimates of Q4/11 are for GDP growth of 1.3% annualized). The rest of world had a bad time in 2011 -- Europe seems to be in a slow down mode -- Greece GDP shrank by 7% in Q4/11 -- not annualized data, real absolute shrinkage. However, since so little of Canada's export are destine for Europe...
The first "reality" is that January 2011 saw gasoline prices at a 40 month high (yep we go to go "pre-recession" to see gasoline prices as high as they were in 2012 -- partly because Gulf region tensions are rising again -- with the embargo of Iran.
However, and this is the important stuff, the Bank of Canada will not change its stance on ultra accomodative interest rates, the reality of the rest of the world says that tensions are still there. Today, 1 year interest rates for Greece was 629% -- so there is a strong premonition that the endgame (intended or otherwise) is in its final stages.