The Consumer Price Index (CPI) rose 6.9% year over year in October, matching the increase in September. Faster price growth for gas and mortgage interest costs were moderated by slowing price growth for food, reported Statistics Canada on Wednesday.
Excluding food and energy, prices rose 5.3% year over year in October, following a gain of 5.4% in September, said the federal agency.
“In October, higher prices at the gas pump put upward pressure on the all-items CPI. Additionally, Canadians renewed or initiated mortgages at higher interest rates, which led to acceleration in the Mortgage Interest Cost Index. Offsetting the upward pressure was slower price growth on a year-over-year basis for natural gas and groceries, particularly prices for fruit, vegetables, and meat,” it said. “On a monthly basis, the CPI rose 0.7% in October following a 0.1% gain in September, largely driven by increased prices for gasoline. This was the largest monthly increase since June 2022. On a seasonally adjusted monthly basis, the CPI was up 0.6%.”
In October, average hourly wages rose 5.6% on a year-over-year basis, meaning that, on average, prices rose faster than wages. Although Canadians experienced a decline in purchasing power, the gap was smaller than in September, said StatsCan.
Andrea Piacquadio
“On a monthly basis, gasoline prices increased 9.2% in October following a decrease in September (-7.4%). The announcement of future oil production cuts by the Organization of the Petroleum Exporting Countries Plus and a weaker Canadian dollar contributed to higher gasoline prices for Canadian consumers,” said the report.
“Gasoline prices rose 17.8% in October compared with October 2021, following a 13.2% increase in September 2022.”
The federal agency said prices for food rose less in October (+10.1%) compared with September (+10.3%) on a year-over-year basis. Prices for meat (+5.5%), fresh fruit (+8.9%), and fresh vegetables (+11.0%) increased at a slower pace in October compared with September, contributing to the deceleration in food prices.
“Despite the slowdown in price growth, prices for food purchased from stores (+11.0%) continued to increase at a faster rate year over year than the all-items CPI for the eleventh consecutive month. Canadians paid more for dry or fresh pasta (+44.8%), margarine (+40.4%), lettuce (+30.2%), rice and rice-based mixes (+14.7%), and soup (+18.4%), among other food items,” it said.
“Prices for some food commodities, such as dairy products (+10.6%) and eggs (+13.8%), increased year over year in October, mainly due to approved producer price increases from their respective governing boards.”
Leslie Preston, Managing Director & Senior Economist with TD Economics, said the inflation report underscores the need for the Bank of Canada to keep the pressure on interest rates to help bring down inflation.
“October’s CPI report is one of two key remaining data releases before the Bank of Canada’s next rate decision in three weeks, and it certainly ticks the box for another 50 basis point increase,” said Preston.
“The other key piece of data will be the November jobs report in a couple of weeks. As outlined in our recent report on job vacancies Canada’s labour market remains very tight. Even if we see a weak report, it is unlikely to move the needle enough on the job market to move the BoC off its tightening bias.”
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
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