Canada’s Inflation Rate Falls to 1.9% in November
The rise in prices eased by one-tenth of a percentage point compared to October, keeping inflation close to the Bank of Canada’s 2% target.
Canada’s annual inflation rate unexpectedly dropped to 1.9% in November, driven by a broad slowdown in prices. Meanwhile, the Consumer Price Index (CPI) remained unchanged on a monthly basis, according to data released on December 17. Analysts had anticipated inflation would hold steady at October’s 2% rate and had forecast a 0.1% monthly increase in the CPI.
The Bank of Canada’s preferred measures of core inflation, the trimmed mean CPI and weighted median CPI, remained stable. However, data from the previous month was revised upward by one-tenth of a percentage point.
The trimmed mean CPI, which excludes extreme price fluctuations, held at 2.7%, while the weighted median CPI, representing the middle value of monthly price changes, stayed at 2.6%.
Inflation Expectations in Canada
Economists noted that the persistent strength of core inflation could pose a challenge for the Bank of Canada. The central bank has emphasized that with overall inflation on a steady downward trajectory, it is crucial to maintain lower interest rates to support the economy. While the Bank of Canada will welcome the drop in headline inflation below 2%, it would prefer to see a sustained decline in core inflation during the holiday season.
The December 17 data is the first of two inflation reports the Bank of Canada will review before its next interest rate decision on January 29.
The central bank has lowered interest rates by 50 basis points in each of its last two monetary policy announcements, bringing the total reduction in borrowing costs to 175 basis points since June. These measures have helped curb consumer price increases, keeping inflation near the midpoint of its desired target range of 1-3% for several months.
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