The Canadian inflation rate edged lower in October, driven by declining gasoline prices and a further cooling in grocery costs, according to new data from Statistics Canada.
The Consumer Price Index (CPI) rose 2.2% year-over-year last month, down from 2.4% increase in September and closer to the Bank of Canada’s 2% target. Gasoline and food were two of the largest contributors to the slowdown.
Analysts surveyed by Reuters had anticipated an annual inflation rate of 2.1%, only slightly lower than the actual reading.
The most significant movement came at the pumps. Prices at the pump fell at a faster pace year over year in October (-9.4%) compared with September (-4.1%), resulting from a 4.8% month-over-month decline in October. The monthly decline was largely due to a switch to cheaper winter blends, as well as lower crude oil prices amid continued concerns of oversupply, StatsCan said.
Food inflation also eased, providing additional relief to households. Grocery prices rose 3.4% year over year in October, down from 4% in September but still the ninth consecutive month in which food inflation outpaced the headline inflation rate.
Prices for other food preparations rose 3.2%, while fresh vegetable prices fell 1.4%. Offsetting some of the relief was a sharp increase in fresh or frozen chicken, which jumped 6.2% after a modest 1.5% rise in September.
On a monthly basis, food purchased from stores fell 0.6%, the largest decline since September 2020.
Overall consumer prices rose 0.2% month-over-month in October, matching economists’ expectations. Seasonally adjusted, prices increased just 0.1%.
Beyond food and gasoline, the inflation picture was mixed. Mortgage interest costs, one of the strongest inflation drivers earlier in the year, continued to moderate, dropping below 3%. However, higher prices for cellular phone services helped offset some of the progress made in other categories.
Despite the broad easing in inflation, StatCan noted that many essential categories remain elevated. Grocery prices, while cooling, are still rising faster than overall inflation, adding ongoing strain to household budgets.
The Bank of Canada’s next interest rate announcement is scheduled for Dec. 10, with the Bank widely expected to hold its key policy rate unchanged at 2.25%.
