The Bank of Canada may have room to hold interest rates at its next March meeting after one of the key inflation indicators it tracks showed some relief in January.

On Tuesday, Statistics Canada reported the Consumer Price Index (CPI) rose 5.9 per cent in January compared to a year ago, slower than the estimated 6.1 per cent gain .

However, core inflation measures are just one of the many factors the Bank of Canada takes into consideration with its key monetary policy rate decisions.

Here are the indicators on the Canadian central bank鈥檚 radar, when it comes to tackling high inflation, .

CORE INFLATION MEASURES

Core inflation measures the change of CPI and excludes food, energy and the effects of changes in indirect taxes like GST.

"In setting monetary policy, the Bank (BoC) seeks to look through such transitory movements in total CPI inflation and focusses on 鈥榗ore鈥� inflation measures that better reflect the underlying trend of inflation,鈥� a post on the Bank of Canada鈥檚 website reads.

CPI-TRIM

CPI-trim is one of the three different measures of core inflation. It aims to filter out extreme monthly price fluctuations by taking out 40 per cent of the total CPI basket, with 20 per cent from the top and another 20 per cent from the bottom. The excluded components can vary from one month to another.

CPI-MEDIAN

CPI-median is another measure of core inflation that aims to strip out significant price movements that are specific to certain components.

鈥淭his approach is similar to CPI-trim as it eliminates all the weighted monthly price variations at both the bottom and top of the distribution of price changes in any given month, except the price change for the component that is the midpoint of that distribution,鈥� it said on Statistics Canada鈥檚 website. It measures core inflation corresponding to the change at the 50th percentile of the CPI basket weights.

CPI-COMMON

CPI-common is the third measure of core inflation that the Bank of Canada takes into consideration with its key monetary policy. It uses a 鈥渇actor model鈥� to find common price changes in different CPI categories, which it uses to filter price movements caused by some factors. But some groups have said the Bank of Canada should retire its use of CPI-common.

In a note by the C.D Howe last September, it said 鈥淭he Bank (BoC) was relying on CPI-common as an indicator of trend inflation during this period, which means monetary policy likely stayed easy longer than it would have if the Bank had relied on something more dependable.鈥�

AVERAGE HOURLY EARNINGS 鈥� LABOUR FORCE SURVEY

The Labour Force Survey (LFS), which Statistics Canada refers to as the household survey, tracks the average wages and salaries of Canadian employees before taxes, and other variables such as bonuses and commissions. The LFS gives an overall picture of labour conditions and is reported shortly after the month is over.

AVERAGE HOURLY EARNINGS 鈥� SURVEY OF EMPLOYMENT, PAYROLLS AND HOURS

Statistics Canada refers to the Survey of Employment, Payrolls and Hours (SEPH) as the payroll or establishment survey. The data is delayed by about two months and it contains additional detail on labour, with estimations on earnings and hours worked. It鈥檚 also a gauge on the monthly change in non-farm payroll employment.

YIELD SPREADS BETWEEN CONVENTIONAL AND REAL RETURN BONDS

This is a measure of the long-run average inflation expectations from market participants. It compares the yields of selected long-term bond issues and Real Return Bonds on the last Wednesday of the month.