Canadian Inflation (November)

Canadian inflation, as measured by the Consumer Price Index (CPI) rose by 1.0% in November year-over-year. This is the largest increase since the pandemic started in March. Excluding gasoline, the CPI rose by 1.4%. Prices rose in six of eight components year-over-year in November, with the recreation, education, and reading index contributing the most to the increase. Growth in the Bank of Canada’s three measures of trend inflation remains unchanged from the previous month, averaging 1.7%.

Regionally, the CPI was positive in eight provinces. In BC, CPI rose by 1.1% in November year-over-year, up from October’s increase of 0.5%. Strong price growth continued for health and personal care (3.3%) and shelter (2.4%). In contrast, gas prices continue to be a drag on BC’s inflation (-12.3%).

Costs for shelter continue to increase, as rental rates rise and record-low interest rates put downward pressure on mortgage costs, making single-family homes more attractive to households demanding more space. As containment measures expand in many provinces, consumers are spending more on furniture and household appliances, which remain above pre-pandemic levels. Canadian inflation is expected to remain subdued in the near future. In this environment, the Bank of Canada will continue to keep interest rates low.