Ottawa: Canada’s headline inflation rate stayed at an 18-year high in November, in line with analyst expectations, as supply chain disruptions and soaring gasoline prices continued to exert upward pressure on prices.
Statistics Canada said the annual increase of 4.7 per cent - marking an eighth consecutive month above the Bank of Canada’s 1-3 per cent control range - was driven by gasoline, up 43.6 per cent on the year, and housing costs. Realtors separately reported that resale home prices hit a record in November.
“Towards the latter half of the month, the impact of the floods in British Columbia and the spread of the Omicron COVID-19 variant created new uncertainties around further potential disruptions to supply chains and oil demand,” said Statscan.
Jimmy Jean, chief economist at Desjardins Group, said it was “comforting” to see in-line inflation data. “You are seeing some moderation...on the month,” he said.
The CPI common measure, a measure of core inflation that tracks common price changes across categories in the CPI basket and which the Bank of Canada says is the best gauge of the economy’s underperformance, rose to 2 per cent from 1.8 per cent in October.
It last hit 2 per cent in August 2018. CPI median and CPI trim stayed at 2.8 per cent and 3.4 per cent, respectively.
Economists said with common at 2 per cent, there was very little slack left in the Canadian economy, leaving the central bank in a position to start hiking interest rates in early 2022.
“I don’t think this moves the dial on the timing for the next BoC hike,” said Andrew Kelvin, chief Canada strategist at TD Securities.
“January remains very much alive but this isn’t something that is going to force immediate action.” The Bank has signaled it could start hiking as soon as April, while money markets are betting on a first increase in March or April.
The Canadian dollar was trading 0.2 per cent lower at 1.2881 to the greenback, or 77.63 US cents, as oil prices fell.