Canada’s annual inflation rate plunged to 1.9 per cent in November, primarily due to lower mortgage interest costs and cheaper travel tours, Statistics Canada reported on Tuesday.
However, even with slowed inflation rate bringing a wave of relief for consumers, many Canadians are still feeling the pinch, especially when it comes to everyday expenses.
Many of the shoppers are still struggle in sectors such as grocery with prices 2.6 per cent up as compared to last year.
Food costs have also skyrocketed by 19.6 per cent as compared to November 2021. While the Bank of Canada hit its 2 per cent inflation target in September, its preferred measures of inflation are still running higher, sitting at 2.6 for CPI-median and 2.7 per cent for CPI-trim.
BMO’s chief economist, Douglas Porter, said “This report reinforces the point that the Bank will now turn to a more gradual path for rate cuts as we head into 2025,”
In the housing sector, shelter prices have gone up by 4.6 per cent compared to last year, but mortgage interest rates have finally slowed down after 15 consecutive months of increases. Rent, however, continues to rise at a faster pace, with a 7.7 per cent jump in November. Ontario, Manitoba, and Nova Scotia are feeling this more than most.
Gas prices also saw a slight drop of 0.5 per cent. Inflation still landed at 2 per cent even after excluding gas prices.
On the bright side, Black Friday deals also brought some relief to the consumers especially with household items, cell phone services, and clothing, with children’s clothing witnessing its biggest price drop ever for November.
Inflation trends could get unpredictable over the next few months. CIBC’s senior economist, Andrew Grantham, pointed out that December’s figures will be affected by a GST holiday, which will tone down inflation for some time.
“Throughout this period the Bank’s assessment of slack in the economy, including how it views upcoming employment data, should become even more important in determining policy decisions,” he said.
