Gasoline Prices Push Inflation to 2.2 per cent

The Conference Board of Canada’s Economist Anna Feng offers the following insights on today's Consumer Price Index data:

Inflation nudged up to 2.2 per cent in November. Core inflation also averaged 2.2 per cent, up from 2.1 per cent in October. With inflation now running above the Bank’s 2 per cent target, the Bank of Canada is likely to keep interest rates stable during next month’s interest rate announcement.”

  • Inflation increased at 2.2 per cent in November, up from 1.9 per cent growth in the previous month.
  • Gasoline prices rose 0.9 per cent on a year-over-year basis last month, after declining continuously for the previous six months. Excluding the impact of gas prices, inflation held steady at 2.3 per cent in November.
  • The average of the three measures of core inflation used by the Bank of Canada was 2.2 per cent last month. This is up slightly from 2.1 per cent in October. While CPI-common held steady at 1.9 per cent, CPI-median inched up to 2.4 per cent and CPI-trim increased by 2.2 per cent. Core inflation is now running slightly above the midpoint of the Bank of Canada’s 2 per cent target.
  • Mortgage interest cost (up 6.6 per cent) continued to exert upward pressure on inflation—though this was the slowest increase since September 2018.
  • Meat prices (up 5.2 per cent) and passenger vehicle insurance premiums (up 7.6 per cent) also contributed to higher inflation last month.
  • The food industry also contributed to growth in manufacturing sales thanks to a surge in the sales of meat products in Alberta and Ontario during the month.
  • Given the strong growth in inflation last month and the pickup in economic growth expected for next year, the Bank of Canada is unlikely to cut interest rates this year. We expect the Bank to maintain its target for the overnight rate at 1.75 percent during its next scheduled interest rate announcement date.
Joseph Kahenga

Anna Feng

Economist

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