There’s room for some hope when it comes to the climbing cost of living. 

According to Statistics Canada's latest Consumer Price Index, the country's annual inflation rate slowed to 6.3% in December, down from 6.8% in November. According to the federal agency, December’s drop in inflation was largely thanks to a deceleration in gas prices. 

The drop in gas prices was somewhat offset by increases in mortgage interest costs (last month, Canada's central bank raised its interest rate for the seventh time in the year), clothing and footwear, and personal care supplies and equipment.

inflationBank of Canada

As Canadians shopped for holiday meals, grocery prices continued to soar in December. These prices, however, soared at a slower pace, with prices up a notable 11% compared to a year ago. In November, grocery prices were up 11.4% on an annual basis. For all of 2022, grocery prices were up 9.8%, marking the fastest pace since 1981.

Excluding food and energy, prices rose 5.3% on a yearly basis in December, largely. unchanged from November's 5.4% year-over-year gain.

As Statistics Canada highlights, Canada's average inflation rate for 2022 was 6.8%, a 40-year high. The rate peaked in the summer, at 8.1% and has been slowly decelerating since -- slowly being the key word.

As the Bank of Canada prepares for its next interest rate decision on January 25, it will be paying close attention to this latest inflation report. Yet another hike is widely expected, according to industry experts.