Inflation in Canada increased to 2.2 per cent on average last month compared with a year prior, cooling slightly from the 2.4 per cent growth seen in September, according to the Consumer Price Index reported by Statistics Canada on Monday.
Gasoline prices fell 9.4 per cent in October compared to a year earlier and helped bring down the overall average for the CPI report, and Statistics Canada says the price decrease was largely because suppliers switched to cheaper winter blends.
The agency adds that stripping away gasoline prices from the overall average of 2.2 per cent reveals consumer inflation actually rose an average of 2.6 per cent.
The Bank of Canada’s governors, as well as most economists, closely monitor what is known as “core” inflation, the metric which removes volatile sectors like gasoline, energy and food to reveal underlying trends in price changes.
Food price increases cooled as well in October at 3.4 per cent, which was down from four per cent growth in September.
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Although there was a decline in price growth last month for food purchased from stores, Statistics Canada says, “prices remained elevated,” and have increased more than the overall inflation rate for nine straight months.
“October’s downtick in inflation looks like relief at first glance, but strip away the ebbing gas prices and things are far less rosy. On closer inspection, the usual suspects continue to pilfer Canadian pockets,” said financial expert Shannon Terrell at NerdWallet Canada in a statement.
“Relief at the gas pumps may be one of the few financial wins Canadians can count on right now. Beyond this, October’s data confirms what most Canadians already know: ongoing cost of living pressures continue to demand smarter, more strategic spending at every turn.”
Prices for cell phone plans and other cellular services increased by 7.7 per cent in October, which marked the first increase since April 2023.
Household budgets may have also been pressured by rising prices for insurance, including homeowners’ and mortgage insurance rising 6.8 per cent last month compared to one year earlier, while some vehicle insurance premiums rose 7.3 per cent.
This comes after the Bank of Canada lowered its overnight benchmark interest rate for the second straight meeting, and as Prime Minister Mark Carney is set to have his cabinet’s budget face a final confidence vote Monday.
After the central bank cut rates last month, Bank of Canada governor Tiff Macklem said the government’s fiscal policy may be more effective at keeping the economy stable rather than making any more changes to borrowing rates.
“Core price pressures remain sticky at rates above the BoC’s (Bank of Canada’s) inflation target, consumer demand has proven resilient to-date despite international trade uncertainty, and fiscal policy is set to provide support to growth in the year ahead,” said economist Abbey Xu at the Royal Bank of Canada in a statement.
“The BoC has indicated the overnight interest rate is ‘about the right level’ provided inflation and economic activity continue following the October projections. Given that backdrop, we do not expect further interest rate reductions from the BoC.”
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