Inflation cooled a mite last month, according to figures released this morning by Statistics Canada.
The unadjusted all-items Consumer Price Index fell 0.2% in October and the annual inflation rate dropped to 0.7% from 1.1%. On a seasonally adjusted basis, consumer prices dipped 0.1% in October. The Bank of Canada's core measure rose an as-expected 0.2% on an unadjusted basis and was flat on a seasonally-adjusted basis. Relative to a year earlier, the Bank’s core rate inched down to 1.2%.
The agency also said the 0.2% dip in the monthly headline inflation rate in October reflected a sharp 5.1% drop in gasoline prices. Lower prices for traveler accommodation; natural gas and electricity also weighed on the monthly index. On the upside, prices for passenger vehicles rose in October as did footwear prices and household equipment costs.
Experts at RBC Economics maintain, "we expect real GDP growth increased at a 2.8% annualized pace in the third quarter, faster than the economy's potential rate and the Bank of Canada's 1.8% projection making it likely that the output gap was smaller than the Bank's estimate of 1.5 percentage points at the end of Q3.
"Having said that," the bank concludes, "the difference is relatively small meaning that it will take a sustained period of above-potential growth before the output gap closes and the Bank is in position to raise the overnight rate."
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