The Consumer Price Index grew 1.4% year-over-year in November, after a 1.0% rise in October, according to Statistics Canada.
This increase comes in spite of a 10.6% drop in energy prices, whicis due in part to the fact that although energy prices fell 10.6%, this was lower than the 17.1% drop seen in October.
“The rise in the annual rate is due to the fact that gas prices were plummeting a year ago, and that inflation-busting factor is now dropping out of the calculation,” said Douglas Porter, chief economist at BMO Financial Group. “We will see that effect play out in much of the industrialized world in coming months.
“As well, the ever-sagging loonie is also beginning to show its ugly side, with prices for many imported products showing some pressure. But the price pressures from a lower loonie seem to be partly mitigated by a sluggish domestic economy.”
In British Columbia, inflation reached 1.7% in the 12 months to November. This was the third-highest increase, after Saskatchewan (up 2.1%) and Alberta (up 2.0%).
Core inflation, which removes the eight most volatile CPI components including fruit, vegetables and energy, was 2.0% year-over-year nationwide, down from 2.1% in October. Auto prices increased 1.9% year-over-year and the price of food increased 3.7%, but this was partially offset by a 9.7% drop in hotel spending and 2.1% decrease in the price of shoes and clothing.
November’s CPI increase was softer than analysts’ expectations, but this weak growth will be short-lived, according Porter.
“The big picture for Canadian CPI is that the days of ultra-low headline inflation readings are now in the past, and we will see it grind back toward 2% in the next fews months,” Porter said.
“The sagging loonie will simply add to the upswing, countering any dampening impact from the latest slide in energy prices.”
StatsCan also released wholesale trade data December 18, which also came out softer than anticipated.
@EmmaHampelBIV
