That’s down from the overall inflation rate of 3.8 per cent in September.
Gas prices fell 6.4 per cent month-over-month, StatCan said, partly thanks to producers switching to cheaper winter blends.
Grocery price inflation slowed for the fourth consecutive month to 5.4 per cent in October — still elevated but down from 5.8 per cent the month earlier.
Price hikes eased in many aisles of the grocery store last month as seafood, fresh vegetables, bakery items, dairy products and more all saw inflation slow.
Housing prices, particularly rent and mortgage interest costs, continued to push inflation higher as well.
StatCan noted that while the rate of goods inflation decelerated last month, services saw prices rise at a faster pace. Higher costs for travel tours, rent and property taxes contributed to the lift.
How will the Bank of Canada react?
Tuesday’s release marks the last set of inflation data for the Bank of Canada before its final rate decision of the year on Dec. 6.
The Bank of Canada as it looks for evidence of a sustained slowdown in consumer price growth as it gauges progress taming inflationary forces.
The Bank of Canada has a target range for inflation of one-to-three per cent, but policymakers have made clear the central bank won’t be satisfied until it hits the two per cent goal.
The central bank opted to hold its key interest rate steady at five per cent at its last rate decision, but has said it is prepared to raise rates again if needed to bring inflation under control.
Measures of so-called “core inflation,” which the Bank of Canada watches closely, also cooled in October.
But Leslie Preston, managing director and senior economist at TD Bank, said in a note Tuesday morning that the central bank will need to see “further progress” before it can be confident inflation will return all the way back down to two per cent.
Katherine Judge, director and senior economist at CIBC Capital Markets, meanwhile said in a note Tuesday that price increases are becoming “more concentrated,” particularly in mortgage pain driven by the central bank’s own rate hikes.
Judge said that October’s inflation report, combined with signs of weakening elsewhere in the economy, should be enough to keep the Bank of Canada on hold in December, with rate cuts potentially beginning in the second quarter of next year.
Preston said she believes the weakening economy will help to “dampen” price pressures, but added “tightness” in the jobs market means the process could take longer.
The central bank’s policymakers will see one more Labour Force Survey from StatCan before its next rate decision on Dec. 6.
Bank of Canada governor Tiff Macklem will speak to reporters in Saint John, N.B., on Wednesday.
— with files from The Canadian Press
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