Canada’s Inflation Rate Cools to 1.9% in November
Inflation Cools to 1.9% in November, But Core Measures remain Stubbornly High
Canadian Consumers See Relief at the Pump and on mortgage Rates, But Grocery Prices Remain Elevated
Ottawa, Canada – Canadian inflation eased to 1.9% in November, marking a welcome slowdown for consumers grappling with rising costs. Statistics Canada reported the dip was largely driven by lower mortgage interest costs and cheaper travel tours.
While the headline inflation rate hit the Bank of Canada’s 2% target in September, core measures of inflation, which exclude volatile items like food and energy, remain stubbornly above target. CPI-median clocked in at 2.6% and CPI-trim at 2.7% in November.
“This report reinforces the point that the bank will now turn to a more gradual path for rate cuts as we head into 2025,” wrote BMO chief economist Douglas Porter in a note to clients.
Housing Costs Show Mixed Signals
On the housing front, shelter prices grew at a slower pace of 4.6% year-over-year in November. Mortgage interest costs slowed for the 15th consecutive month, offering some relief to homeowners. However, rental prices continued to climb, increasing at a faster yearly rate of 7.7% compared to 7.3% in October.Ontario, Manitoba, and Nova Scotia saw the most meaningful increases in rental costs.
Grocery Prices Still a Concern
While the overall pace of inflation slowed,grocery prices continued to rise,albeit at a slower rate of 2.6% compared to the same time last year. However, these costs are still substantially higher than they were a year ago, having risen 19.6% since November 2021.
Gas Prices Dip, But Temporary Relief
Gas prices fell in November to -0.5%, offering some respite at the pump. However,this decline was partially offset by a base-year effect,making the year-over-year decline smaller. Excluding gasoline, overall inflation rose 2% last month.
Looking ahead: Uncertainty Remains
Economists remain cautious about predicting future inflation trends. CIBC senior economist Andrew Grantham noted that December figures will be impacted by a mid-month GST holiday on certain goods and services, making it difficult to discern the underlying trend.
“When the tax is reinstated in mid-February, inflation figures will see a temporary boost,” Grantham added. “Throughout this period, the Bank’s assessment of slack in the economy, including how it views upcoming employment data, shoudl become even more important in determining policy decisions.”
The Bank of Canada is expected to announce its next interest rate decision on January 29th. while BMO anticipates another cut, the stubbornly high core inflation readings may prompt a pause in rate cuts, especially if the U.S. Federal Reserve takes a similar approach.
Inflation cools, But Core Rates Keep Pressure on Bank of Canada
NewsDirectory3.com – Good afternoon,and welcome back. Today we are speaking with Dr. Emily Carter,a leading economist specializing in monetary policy,to discuss the latest Canadian inflation figures and what they might mean for interest rates in the coming months. Dr. Carter,thank you for joining us.
Dr. Carter: Thanks for having me.
NewsDirectory3.com: Canada saw inflation cool to 1.9% in November, hitting the Bank of Canada’s target. But core inflation remains stubbornly above target.How meaningful is this discrepancy?
Dr. Carter: It’s certainly a mixed bag. While the headline figure hitting the target is positive news, the fact that core inflation, which strips out volatile items like food and energy, remains above target suggests underlying inflationary pressures persist. This will likely give the Bank of Canada pause for thoght.
NewsDirectory3.com: We’ve seen some relief in areas like mortgage costs and gas prices, but grocery prices continue to rise.What’s your take on these trends?
Dr.Carter: The decline in mortgage interest costs is a direct result of the Bank’s previous interest rate hikes taking effect. This should offer some relief to homeowners. As for gas prices, the recent drop is welcome, but it’s partially due to base-year effects, meaning we may not see sustained relief at the pump. Grocery prices are a serious concern. While the rate of increase has slowed,they’ve risen significantly over the past year,putting a strain on household budgets.
NewsDirectory3.com: Looking ahead, what are the key factors the Bank of Canada will be considering?
Dr. Carter: The Bank will be closely monitoring core inflation, employment data, and the impact of global economic developments. the upcoming GST holiday and its subsequent reinstatement could complicate the picture in the short term.
NewsDirectory3.com: Some analysts predict another interest rate cut in January. Do you agree?
Dr. Carter: While BMO anticipates a cut, the stubbornly high core inflation readings, coupled with potential moves by the U.S. Federal Reserve, could led the Bank of Canada to pause further rate cuts for now.
NewsDirectory3.com: Dr.Carter, thank you for your insights.