Article content
Canada’s inflation came in slightly hotter than expected for October, a result that could dampen hopes of another jumbo interest rate cut from the Bank of Canada.
The inflation rate rose to two per cent compared to 1.6 per cent in September, as gasoline prices fell to a lesser extent, Statistics Canada said Tuesday.
This was expected by the Bank of Canada, which predicted in its latest monetary policy report that inflation would move above two per cent in the coming months “reflecting a smaller drag from energy prices.”
Article content
Services inflation rose by 3.6 per cent in October, the smallest yearly increase since January 2022. Goods inflation rose by 0.1 per cent last month, after a one per cent decline in September.
Statistics Canada also reported a slight acceleration in the measures the Bank of Canada prefers to look at when making its monetary policy decisions. Last month, CPI-common rose by 0.1 per cent to 2.2 per cent, CPI-median rose by 0.2 per cent to 2.5 per cent and CPI-trim rose by 0.2 per cent to 2.6 per cent.
Grocery prices accelerated at a faster pace than headline inflation for the third consecutive month, rising by 2.7 per cent, up from 2.4 per cent in September.
Statistics Canada also noted the rise in property taxes, which are priced annually in October. Property taxes and other special charges rose six per cent year-over-year, the highest increase since 1992. All the provinces recorded increases, with Newfoundland and Labrador (9.7 per cent) and British Columbia (eight per cent) posting the biggest hikes.
Royce Mendes, an economist with Desjardins Group, said the data’s upside surprise suggests inflation is a “tad more” sticky than expected.
Article content
Recommended from Editorial
“We have more conviction in our call that the Bank of Canada will cut rates just 25 basis points in December,” he wrote in a note, adding that he expects more market participants and economists to migrate to the “quarter-point camp.”
The central bank cut 50 basis points off its policy rate in October, and some expected a second large cut in December. Odds in overnight swaps of that shrank to one in three, from about 50 per cent before the data.
• Email: jgowling@postmedia.com
Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.
Share this article in your social network
