Close
604-284-0530
Mon - Fri : 09:00 - 17:00

Canada’s annual inflation rate accelerates to 0.7% in October

OTTAWA (Reuters) – Canada’s annual inflation rate unexpectedly accelerated to 0.7% in October, up from a year-over-year increase of 0.5% in September, mainly on higher food prices, Statistics Canada said on Wednesday.

The result beat analysts’ estimates of an annual 0.4% increase in October. Excluding gasoline, prices rose 1.0% in October from a year earlier, matching September.

“The headline data was a bit firmer than expected. But the way the market’s trading the data these days, it’s a bit more attuned to downside misses than upside surprises,” said Bipan Rai, North America head of FX strategy at CIBC Capital Markets.

The Canadian dollar gave back some of its earlier gains after the data, trading up 0.1% at 1.3089 to the greenback, or 76.40 U.S. cents.

Headline inflation remains less than half of what it was before the coronavirus pandemic and well below the Bank of Canada’s 2% target, economists noted. Still, two of the three core measures the central bank uses increased.

The common measure, which the Bank says is the best gauge of the economy’s underperformance, gained slightly to 1.6% from 1.5% in September. The CPI trim measure also increased to 1.8% from 1.7%, and the median remained at 1.9%.

“The Bank of Canada has told us they’re not going to hike rates until inflation gets sustainably above their target, and we’re still below their target,” said Doug Porter, chief economists at BMO Capital Markets.

“But in the medium term, the resiliency of core does suggest that the bank may be forced to make a decision earlier than perhaps they thought.”

The Bank of Canada has said it expects interest rates to remain at current record lows into 2023.

Prices rose in five of the eight major components of the index, driven by food and shelter costs, StatsCan said. The homeowners’ replacement cost index, which tracks the price of new homes, posted its largest monthly increase since June 1991.

Reference: Yahoo! Finance

Average new mortgage tops $300,000 for first time as consumer debt in Canada hits $2 trillion Canadian economic decision-makers press pause for U.S. election outcome