Canada’s Inflation Steady in November

Canada's annual inflation rate eased to 3.1% in November, down from 3.8% in October, as lower gas prices offset higher costs for food, rent and mortgage interest, according to Statistics Canada .

Gasoline prices fell by 6.4% in November compared to October, and by 7.8% compared to November 2020. Excluding gasoline, the inflation rate would have been 3.6% in November.

Food prices rose by 5.4% year-over-year in November, slightly slower than the 5.8% increase in October. However, consumers still paid more than 20% more for a basket of groceries relative to three years ago.

Other major contributors to the inflation rate were rent, which increased by 4.4%, and mortgage interest costs, which jumped by 16.9%. Prices for travel tours also accelerated by 18.7%, reflecting the recovery in demand for travel services.

The Bank of Canada, which targets an inflation rate of 2%, has raised its key interest rate three times this year to cool down the economy and inflation pressures. The central bank is expected to keep rates unchanged at 5% at its next meeting on Dec. 6.

Two of the bank's core inflation measures, which exclude more volatile items, also moderated in November, averaging 3.6%, down from an upwardly revised 3.8% in October. Another measure, a three-month moving average of underlying price pressures, dropped to an annualized pace of 2.96%, from 3.67% in October.

Some economists said the inflation data could signal a turning point for price pressures and open the door for interest rate cuts in the first half of 2024. Others said the inflation rate could remain elevated for longer due to supply chain disruptions and labour shortages.