Inflation remained something of a sleeping giant last month, according to figures released this morning by Statistics Canada.
The agency's unadjusted all-items Canadian Consumer Price Index was unchanged, on a month-over-month basis, in November. The annual inflation rate rose but to a still very modest 0.9% following a 0.7% reading in October that marked a six-month low for the measure. On a seasonally adjusted basis, consumer prices increased 0.2% in November.
Month-over-month growth in the unadjusted headline index was, once again, weighed down by falling gasoline prices which fell 1.1% in the month; however, this did not prevent the year-over-year rate of growth in the component from rising to +0.4% from –4.3% in October as a larger 5.7% monthly drop in November 2012 fell out of the year-over-year calculation. Seasonal declines in travel services (-3.2%) and clothing (-2.0%) prices were also recorded with offset provided by a 1.6% increase in home insurance prices and a 1.5% increase in electricity prices.
The Bank of Canada, in its December 4 rate decision, reiterated its concern about the slow pace of price growth noting that "downside risks to inflation appear to be greater" than had been previously anticipated.
"Today’s report," according to experts at RBC Economics, "will not alter that thinking with both the headline and core rates holding around the bottom end of the Bank of Canada’s 1% to 3% target range and the average core rate over October and November of 1.1% notably below the 1.4% Q4 average the Bank expected as of its last forecast in October.
"We still expect inflation to drift higher going forward," concludes the bank, "in part driven by an improving demand backdrop; however, the pace of increase is likely to be modest and we do not assume that core CPI inflation will reach the mid-point of the Bank’s target range until late in 2015."
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