Consumer prices in Canada advanced at a steady pace last month as households continued to feel the pinch of higher costs for mortgage interest, food and rent. The consumer-price index rose 3.1% in November from a year earlier, unchanged from the rise the month before, Statistics Canada said Tuesday.
The steady pace for the month leaves inflation just out of reach of the Bank of Canada's 1% to 3% target range, though it has cooled markedly from last summer's peak of 8.1%. Central bankers have pushed back against market expectations interest rates could begin to fall from early in the new year, and have said they are looking for evidence inflation is on a sustainable path toward the 2% midpoint of the target before cuts will be considered.
Mortgage interest costs, rent and food continue to be the largest drivers of annual inflation, though the pace of increases at grocery stores continues to slow. November also saw continued elevated prices for services, with a jump in prices for travel tours, mainly to events being held in U.S. cities.
From the previously month, prices were edged up 0.1%, missing the 0.1% fall economists had expected.
Core prices, which strip out volatile food and energy components, climbed 0.2% from the month before and were 3.5% higher than a year earlier, a slight pick up from the 3.4% gain in October.
The Bank of Canada expects 2024 to be a year of transition for the economy as the effects of past interest rate increases that took its policy rate to a 22-year high of 5% continue to take hold, restraining spending and subduing economic growth. In a speech last week, Gov. Tiff Macklem forecast there would be some push and pull on inflation as a cooling economy dampens price pressures but other forces continue to buoy prices.
Two measures of annual core inflation the Bank of Canada closely monitors, weighted median and trimmed mean, were unchanged in November at an average 3.45%, Statistics Canada said. While the measures have cooled in recent months they have hovered between 3% and 5% since last year and remain well above the central bank's target.
Bank of Canada policymakers next decide on interest rates in late January, when they will also have December inflation data to hand and are scheduled to update their economic projections. Data to date has shown the economy is beginning to flatline, and contracted 1.1% on an annualized basis in the third quarter of the year, while unemployment is ticking higher and the housing market is again struggling after a rebound early in 2023.
November's inflation report showed prices for food at stores continued to increase in November, climbing 4.7% on a year earlier, though the pace was slower than October's 5.4% advance. That marked a fifth consecutive month that grocery price growth has slowed.
Energy prices fell more sharply in November than in the month before, led by sharply lower prices for fuel oil that was in part due to the temporary suspension of the federal government's carbon levy.
Consumers also saw some relief on prices for cellular services, with consumers who signed up for a cell phone plan during November paying less as a variety of promotions across the industry ahead of Black Friday sales offered reduced pricing plans and bonus data, Statistics Canada said.
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