The Consumer Price Index (CPI) rose at an annual rate of 3.1% in November, the same as the previous month.
The price rise is higher than expected by most economists, who saw the CPI moving closer to the Bank of Canada’s 2% target.
The lack of progress on the inflation front in November is also notable for the basic measures favored by the Bank of Canada, which remained at the same level as the previous month.
The cost of mortgage interest and the price of food continue to support inflation. In November, prices were also pushed up by the increase in package tour prices, according to Statistics Canada.
On the other hand, the rise in food prices has slowed. Grocery store food prices increased 4.7%, compared to 5.4% the previous month. This is the fifth consecutive monthly slowdown in the rise in food prices.
Prices of meat, canned vegetables and sugar still show growth above 5%. The price of cell phone services and fuel oil are down compared to last year. In the case of cellular services, consumers benefited from discounts offered by suppliers during Black Friday, while the drop in the price of fuel oil reflects the elimination of the federal carbon tax in the Atlantic provinces.
In Quebec, inflation slowed to 3.6%, after being 4.2% in November, but the province remains the one with the highest inflation rate in the country.
The Bank of Canada is maintaining its key rate at 5% pending sustained progress on the inflation front and has indicated that inflation will need to fall below 3% sustainably before a reduction can be considered. interest rates.
Nothing in the November inflation report changes the position of the central bank, commented Claire Fan, economist at the Royal Bank, who expects that caution will remain in place at the Bank of Canada.
The Royal Bank expected the CPI to fall below 3% in November.
There are still encouraging signs in the November inflation reading, according to National Bank economists Matthieu Arseneau and Alexandra Ducharme. “It is interesting to note that rent prices showed their lowest increase in five months,” they point out.
Core inflation measures, unchanged at an annual rate, are clearly improving on a three-month annualized basis, their report notes. “It is important to remember that progress on inflation will not necessarily be linear. »
“The November inflation data probably does not correspond to what the Bank of Canada wanted,” commented Desjardins economist Randall Bartlett, who nevertheless believes “that there is sufficient progress in the inflation report. ‘November inflation so we’re still waiting for rate cuts to begin in mid-2024.’
The Consumer Price Index for the month of December will be known on January 16 and the next rate announcement from the Bank of Canada is scheduled for January 24.
