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CPI Growth Falls Below Bank of Canada’s Target in November

Canadian Economics

By: Kiefer Van Mulligen

  • In November, the Consumer Price Index (CPI) rose by 1.9 per cent (y/y). This was lower than October’s 2.0 per cent (y/y) increase.
  • Gasoline prices were essentially unchanged month-over-month but were 0.5 per cent lower than a year ago. Year-over-year, food prices increased by 2.8 per cent (y/y) following a 3.0 per cent gain in October.
  • Core CPI (excluding food and energy) grew by 1.9 per cent in November (y/y), which was lower than in October. Several shelter components were key contributors to overall CPI growth.
  • On a seasonally adjusted monthly basis, the CPI rose by 0.1 per cent in November (following a 0.3 per cent increase in October).
  • The average of the Bank of Canada’s two preferred core inflation measures remained steady in November. CPI-median stayed at 2.6 per cent while CPI-trim sat at 2.7 per cent.

Key insights

Inflation in Canada slipped just below the midpoint of the Bank of Canada’s target range in November. Statistics Canada noted that slower price growth was broad-based. Black Friday sales during the month contributed to bringing many goods prices down. At the same time, shelter costs remained the largest upward contributor to CPI growth. Excluding shelter, the index rose by only 0.8 per cent (y/y). Rent price growth decelerated between August and October but rose again in November, increasing by 7.7 per cent (y/y). Mortgage interest costs decelerated for a fifteenth consecutive month and were 13.2 per cent higher than a year ago. Food price growth continued to outpace the all-items average. Prices for food in restaurants, in particular, rose by a steady 3.4 per cent in November. The federal GST holiday will mechanically lower the cost of dining out over the next two months, though these prices will rise again after the tax break expires in late February.

·Inflation receded in 2024, but risks to the outlook will remain high in the year ahead. Bank of Canada Governor Tiff Macklem recently reiterated that the world is more shock-prone. Donald Trump’s tariff threats, for example, are a clear and present danger to Canadian consumer prices. The Canadian dollar has weakened in anticipation of tariff turbulence, which is already having an inflationary effect. Domestically, the federal government’s recent Fall Economic Statement highlights its commitments to affordability measures in the new year, including the ongoing implementation of $10-a-day daycare. However, Minister of Finance Chrystia Freeland’s sudden resignation heightens the uncertainty surrounding Canada’s economy. Even as price pressures have largely been brought to heel and monetary policy is unwinding quickly, political and economic headwinds will challenge inflation stability as the new year unfolds.

For more details about our inflation forecast and inflation’s impact on the Canadian economy, please consult our Canadian Five-Year Outlook.

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