Andrea Piacquadio
In October, the Consumer Price Index (CPI) rose 3.1% on a year-over-year basis, down from a 3.8% gain in September. The year-over-year deceleration was largely a result of lower prices for gasoline (-7.8%) in October. Excluding gasoline, the CPI rose 3.6% in October, following a 3.7% increase in September, reported Statistics Canada on Tuesday.
While prices for goods (+1.6%) decelerated, led by lower prices at the pump, prices for services (+4.6%) rose at a faster pace in October, largely driven by higher prices for travel tours, rent and property taxes and other special charges, said the federal agency.
“The largest contributors to the year-over-year CPI increase continued to be mortgage interest cost, food purchased from stores and rent,” it said.
“On a monthly basis, the CPI rose 0.1% in October, following a 0.1% decline in September. The monthly increase was largely driven by travel tours and property taxes and other special charges, which are priced annually in October. On a seasonally adjusted monthly basis, the CPI fell 0.1%.”
On a year-over-year basis, consumers paid 7.8% less for gasoline in October after a 7.5% increase in September. The decline in October was partly driven by a base-year effect, as prices increased 9.2% on a monthly basis in October 2022 when the Organization of the Petroleum Exporting Countries Plus announced production cuts, said the report.
In October 2023, prices for gasoline fell 6.4% month over month. The decline was largely due to lower refining margins, which were partly driven by producers switching to cheaper winter blends, it added.
“While grocery prices remained at elevated levels, they also continued their trend of slower year-over-year growth, with a 5.4% increase in October following a 5.8% gain in September. While deceleration continued to be broad-based, fresh vegetables (+5.0%) contributed the most to the slowdown,” said StatsCan.
Leslie Preston, Managing Director & Senior Economist with TD Economics, said it is encouraging to see another leg down in CPI inflation in October, but the Bank of Canada will likely need to see further progress on core inflation before it feels confident that inflation is headed back to the 2% target.
“There is little doubt that Canada’s economy has cooled in recent months, but the chill in inflation that should follow is proving slow to show up. We expect weaker demand in the economy will ultimately dampen price pressures, but given tightness in the labour market, it will take time,” said Preston.
“This presents a communication challenge for the Bank of Canada. The objective of monetary policy in Canada is to keep inflation “low and stable” and progress on meeting its target has been slow despite aggressive rate increases. Fortunately, we won’t need to wait long to get the Bank’s latest thinking on inflation, with Governor Macklem slated to speak on “The Cost of High Inflation” tomorrow in Saint John. We’d expect the Governor to emphasize for Canadians why the Bank is laser focused on wrestling inflation back to target, even though the process is painful.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list
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