Canada’s inflation rate holds at 3.1% in November

Canada’s annual inflation rate held at 3.1 per cent in November, higher than analyst expectations of 2.9 per cent, Statistics Canada said Tuesday in a report.

The result was largely driven by higher prices for travel tours, which rose 26.1 per cent on an annual basis.

Analysis: November’s report doesn’t provide great revelations on where inflation is headed

On an emotional level, perhaps we can be thankful that we ended another stressful inflation year with a quiet report to send us into the holidays. But if you’re looking for any great revelations on where inflation is headed, and how quickly it will get there, the November CPI report won’t help much.

The headline inflation rate held steady at 3.1 per cent, and both of the Bank of Canada’s core inflation gauges were also unchanged, at 3.4 and 3.5 per cent. After two months of fairly significant declines, perhaps it’s modestly good news that they didn’t backslide.

On a month-to-month basis, overall CPI was up a thin 0.1 per cent, matching October’s pace – though, notably, on a seasonally adjusted basis, the increase was a hotter 0.3 per cent, after being flat in October. If you’re into three-month inflation readings – as many economists are these days, as a means of tracking the shorter-term trend – the seasonally adjusted CPI was up at an annualized pace of a tame 1.5 per cent over the past three months.

This report does nothing to change the Bank of Canada’s narrative on interest rates – it will still be looking for further evidence that core pressures are cooling. The monthly and three-month trends will be somewhat encouraging, as will the continued slowdown of food inflation; the sky-high pace of rent and mortgage inflation will remain a source of concern. The central bank will have one more inflation report – in mid-January – before its next interest rate decision, on Jan. 24. It would have to see a lot more than the numbers in this report to soften its position and drop its warning that further rate increases are still possible.