Canada’s annual inflation rate was 2.2 per cent in November, unchanged from the previous month, driven primarily by an increase in food prices which rose at their fastest pace in more than two years, Statistics Canada said on Monday.
A year-on-year drop in the costs of gasoline and shelter partially offset the rise in food prices, the statistics agency said.
It was the first month since March that core measures of inflation, which strip out volatile items, came in below 3 per cent, the upper end of the Bank of Canada’s control range.
Analysts polled by Reuters had forecast annual inflation of 2.3 per cent.
November’s monthly inflation matched analysts’ estimates of 0.1 per cent, down from 0.2 per cent in October, Statscan said.
Canada’s annual inflation has been subdued since April due to the removal of a carbon levy on the sale of gasoline. This has kept the price of the fuel low on a year-on-year basis, helping contain overall inflation.
Statscan’s data showed that the price of gasoline was up 1.8 per cent in November when compared with October, but on an annual basis it was 7.8-per-cent lower.
Without the effect of gasoline, November’s CPI was 2.6 per cent.
Food prices continued to rise, with economists pointing to them as one of the most significant drivers of inflation, which has proven sticky despite big cuts in interest rates by the central bank.
Food prices overall rose by 4.2 per cent on a yearly basis in November, the biggest increase since December 2023, spurred by a 4.7-per-cent rise in grocery prices and a 3.3-per-cent increase in the cost of food purchased from restaurants, Statscan said.
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Adverse weather conditions in growing regions and President Donald Trump’s import tariffs are considered to be driving up food prices, Statscan said.
The Bank of Canada’s preferred measures of core inflation – CPI-median and CPI-trim – had hovered around 3 per cent since April when Trump’s tariffs started to take effect.
CPI-median, the centermost component of the CPI basket, edged down to 2.8 per cent in November from 3 per cent in the prior month. CPI-trim, which excludes the most extreme price changes, was also at 2.8 per cent last month from 3 per cent in October.
The Canadian dollar firmed slightly after the data, trading up 0.07 per cent to 1.3761 to the U.S. dollar, or 72.67 U.S. cents. Yields on Canada’s two-year government bonds were down 2.3 basis points at 2.486 per cent.
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