The Consumer Price Index (CPI) rose 3.1% on a year-over-year basis in November, matching the 3.1% increase in October. In November, higher prices for travel tours put upward pressure on the CPI. Offsetting the upward pressure was slower price growth, on a year-over-year basis, for food alongside lower prices for cellular services and fuel oil. Excluding food and energy, the CPI increased 3.5% in November, following a 3.4% gain in October, reported Statistics Canada on Tuesday.
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“Canadians continued to feel the impact of higher prices for mortgage interest costs (+29.8%), food purchased from stores (+4.7%) and rent (+7.4%), which were the largest contributors to the year-over-year increase in November,” added the federal agency.
On a monthly basis, the CPI rose 0.1% in November, the same growth rate as in October (+0.1%). Gasoline prices fell to a lesser extent month over month in November (-3.5%) compared with October (-6.4%), putting upward pressure on the monthly CPI figure. On a seasonally adjusted monthly basis, the CPI rose 0.3% in November, said the report.
The federal agency said prices for food purchased from stores continued to increase in November (+4.7%) but at a slower pace compared with October (+5.4%), with broad-based decelerations across food components. This marked the fifth consecutive month that grocery price growth slowed year over year, with prices for non-alcoholic beverages (-0.6%), fresh vegetables (+2.5%) and other food preparations (+6.4%) contributing the most to the slowdown. Food prices continue to be driven by a variety of international and domestic factors. In contrast, prices for meat (+5.0%), preserved vegetables and vegetable preparations (+5.8%) and sugar and confectionery (+8.3%) increased at a faster pace on a year-over-year basis in November compared with October.
“Energy prices fell to a greater extent year over year in November (-5.7%) compared with October (-5.4%), led by lower prices for fuel oil. Prices for fuel oil and other fuels fell 23.6% at the national level in November, after a 12.6% decline in October. The temporary suspension of the federal carbon levy on fuel oil contributed to the decline,” said StatsCan.
“Electricity prices rose 8.2% year over year in November, following a 6.7% increase in October, moderating the decline in energy prices. The acceleration in electricity prices was largely the result of higher prices in Ontario (+7.0%), stemming from increased time-of-use rates in the province.”
Andrew Grantham
Andrew Grantham, Senior Economist with CIBC Capital Markets, said headline inflation failed to ease as expected in November, but softer readings on its core measures compared to earlier in the year should still give the Bank of Canada some comfort that underlying trends are headed in the right direction.
Doug Porter
Doug Porter, Chief Economist with BMO Economics, said today’s moderately disappointing result drives home the point that we still have an inflation fight on our hands—in case there was really any doubt.
Leslie Preston
Leslie Preston, Managing Director & Senior Economist with TD Economics, said the Bank of Canada got a real mix in their inflation stocking this month.
“There were a few lumps of coal in the form of no progress on headline inflation, and continued strength in services inflation. But, when they dig down to the bottom of the toe there is a shiny bauble – that their preferred core inflation measures averaged just below 2 ½% on a annualized basis over the past three months, the slowest pace since the beginning of 2021.” she said.”Governor Macklem may be humming All I want for Christmas is two (percent), but he is going to need to wait a little longer for that gift. Canada’s economy has cooled in recent months, and inflation is slowly feeling the chill. We expect weaker demand in the economy will gradually see inflation come down enough for the Bank of Canada to cut rates in the second quarter of next year (see our latest forecast).”
Claire Fan
Claire Fan, Economist with Royal Bank of Canada, said the CPI report was an upside surprise that followed slower prints in prior months, and should not have changed the story that inflation has been broadly easing in Canada, alongside weakening macro backdrop.
“Broader ‘core’ measures of price growth still improved in November and some of the largest contributors to near-term price pressures, namely mortgage interest costs and rents actually eased by more than expected. If anything, the release today serves as a reminder that inflation readings can still be “sticky”, and why we continue to expect a cautious approach as the BoC starts to think about when to begin cutting interest rates. Our expectation is for the first rate cut to come around mid-year 2024, contingent on further (but widely expected) softening in CPI readings in the months ahead,” she said.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list
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