Canadian headline inflation accelerates in November on energy price rise

Canada’s headline inflation accelerated in November. On a year-on-year basis, the consumer price inflation accelerated to 2.2 percent from October’s 1.9 percent. Today’s print is in line with consensus expectations. On a sequential basis, prices rose 0.1 percent, decelerating from October’s gain of 0.3 percent.

Increased energy price inflation mainly contributed to the higher headline inflation. On a year-on-year basis, energy prices rose 1.5 percent from October’s -2.9 percent. This is mainly a base effect, reflecting a steep fall in energy prices last November that has now dropped out of the year-on-year calculation.

Amongst other categories that recorded stronger inflation were clothing and footwear, health and personal care and alcohol and tobacco. Other categories recorded slower price growth in the month on a year-on-year basis.

Meanwhile, CPI-median recorded the strongest print of the Bank of Canada’s core measures, rising to 2.4 percent. CPI-trim also came in higher at 2.2 percent, while CPI-common remained the same at 1.9 percent. On average, the measures were at 2.2 percent, the highest level since May 2009.

Inflation accelerated in November. While it was mainly due to energy, the acceleration in the CPI-median to 2.4 percent suggests that the rise in price growth has been comparatively wide over the past year.

“That said, we do not expect to see a burst of inflationary pressures over the next year. With the economy likely still constrained by uncertainty and cautious consumers, growth is likely to come in close to potential, limiting inflation”, said TD Economics in a research report.

The Canadian central bank has noted how close inflation is to its target in its deliberations on monetary policy.

“Still, it is more likely to respond to data on the real economy, especially the state of the job market, as it plots its next course of action in the New Year”, added TD Economics.