Grocery price hikes slow for 5th straight month in November – National

Canada’s annual inflation rate held steady at 3.1 per cent in November, Statistics Canada said Tuesday, amid a “broad-based” easing in grocery price hikes.

Some economists had expected a decline in the headline inflation figure, but StatCan said higher prices on travel tours and elevated housing costs kept the annual rate steady.

Rents were up 7.4 per cent year-over-year — down from the previous month — and mortgage interest costs rose nearly 30 per cent annually, the agency noted.

A 26.1 per cent jump in the prices for travel tours last month was offset by drops in the cost of cellular services, which StatCan said related to Black Friday deals in November.

Gas prices were down last month but to a lesser extent than October, which the agency said put upward pressure on the monthly inflation figure. A drop in the price of fuel oil helped to reduce price pressures in the month, with StatCan noting the Liberal government’s temporary suspension of the federal carbon levy on home heating oil “contributed to the decline.”

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November was the fifth straight month that food inflation slowed, the agency noted, with grocery prices rising 4.7 per cent annually in the month.


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StatCan said that the easing at the grocery store was “broad-based,” with price hikes on every component in the grocery basket cooling from October’s increases. Fresh vegetables (up 2.5 per cent), processed meat (up 1.8 per cent) and fish (up 1.3 per cent) in particular saw substantial easing, with overall prices declining on non-alcoholic beverages.

How does this affect the Bank of Canada’s decisions?

The Bank of Canada has been encouraged by the recent slowdown in inflation and the economy overall, opting to hold its key interest rate steady at five per cent over the last few months.

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RBC economist Claire Fan said in a note that while the November inflation print might mark an “upside surprise” compared to the cooling seen in recent months, there were still signs of progress under the hood.

Fan said Tuesday that the latest consumer price index report should “serve as a reminder that inflation readings can be ‘sticky.’”

CIBC senior economist Andrew Grantham said in a note to clients on Tuesday morning that inflation may well accelerate again come December, given less favourable comparisons to gas prices in the same month last year. But he expects that inflation will continue to ease over the spring and summer.

The Bank of Canada’s preferred measures of core inflations continued to ease, economists noted, with the three-month annualized rates for these metrics averaging to 2.5 per cent in the month.


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Forecasters expect the central bank’s next move will be to cut interest rates once it feels more confident that inflation is heading back to its two per cent target.

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Money markets trimmed their expectations for monetary policy easing after Tuesday’s inflation report, with Reuters putting the chances of a cut next month dipping to 16.0 per cent from 21.4 per cent. Markets still expect the central bank to begin easing as soon as April.

Grantham said that with signs the drivers of inflation are less widespread and expected cooling in the economy next year, rates could come down starting in June of 2024.

“Our expectation is for the first rate cut to come around mid-year 2024, contingent on further (but widely expected) softening in CPI readings in the months ahead,” Fan wrote Tuesday.

— with files from The Canadian Press, Reuters

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