Canada’s annual inflation rate rose 1.9 per cent in November, Statistics Canada said on Tuesday, after increasing 2 per cent in October. Economists had expected the Consumer Price Index (CPI) to increase at an annual rate of 2 per cent in November, according to economists polled by Reuters.
Statistics Canada said in a release that slower price growth was broad-based, with prices for travel tours and the mortgage interest cost index contributing the most to the deceleration. Mortgage interest cost inflation decelerated for the 15th straight month, the data agency noted, rising 13.2 per cent in November from 14.7 per cent in October.
Hotel prices rose, thanks to the impact of Taylor Swift and her Eras Tour. Prices for travel services fell at a slower rate than they did in October, due to higher prices for accommodations in Ontario, where Swift had six sold-out concerts in November. Statistics Canada said prices for traveller accommodations were up 11 per cent in Ontario, “the swiftest monthly increase ever recorded for the month of November, coinciding with a series of high-profile concerts.”
The cost of groceries continues to grow faster than headline inflation. The price of food purchased from stores increased 2.6 per cent in November. Statistics Canada said compared to November 2021, grocery prices are up 19.6 per cent.
On a monthly basis, CPI was unchanged in November following a 0.4 per cent increase in October. Seasonally adjusted, CPI rose 0.1 per cent.
The inflation report is the first of two that will come out before the Bank of Canada makes its next interest rate decision on Jan. 29. The central bank cut its benchmark interest rate by 50 basis points at each of its last two decisions, with its policy rate now sitting at 3.25 per cent. Since June, the BoC has cut its policy rate by 175 basis points, although Governor Tiff Macklem said the bank will take “a more gradual approach” to monetary policy going forward.
Market odds for rates were hardly changed after the inflation report was released, Reuters said. They currently see a 55 per cent chance of a 25 basis point cut in January.
BMO Capital Markets chief economist Douglas Porter wrote in a note on Tuesday that while the headline result was lower than economists expected, “the good news was countered by some stickiness in the Bank of Canada’s two main measures of core inflation.” Measures of core inflation, which had accelerated in October, held steady in November. CPI-median was unchanged at 2.6 per cent, while CPI-trim remained at 2.7 per cent.