The unadjusted all-items Canadian CPI index fell 0.2% in November with the annual inflation rate tipping down to 0.8% from 1.2% in October. On a seasonally adjusted basis, consumer prices also fell 0.2%. The Bank of Canada's core measure was unchanged in November on both an unadjusted and seasonally-adjusted basis to be 1.2% higher than in November 2011. The core rate stood at the lowest level since February 2011 while the headline rate was the lowest since October 2009.
In the month of November, prices for passenger vehicles, natural gas, fresh fruit and vegetables increased relative to October. These increases were more than offset by falling prices for gasoline, clothing, electricity, traveler accommodation and mortgage interest.
Clothing and footwear prices posted a 2.3% monthly decline and were 0.6% lower than in November 2011. Transportation costs fell 1% in the month and were 0.2% lower than a year earlier. Gasoline prices dropped 5.7% in November and stood only 0.4% higher than a year earlier. Food prices, increased by 0.7% led by fresh fruit and vegetable costs and were 1.7% higher than a year earlier.
The core measure, which excludes the prices of the eight most volatile components of the CPI, held steady in November as rising prices for passenger vehicles offset the decline in clothing prices. The other components of the core measure made small, offsetting movements in the month. The core inflation rate slipped to 1.2% in November, contrary to market expectations that the rate would rise to 1.4%.
"So far in the fourth quarter," according to experts at RBC Economics, "both the headline and core rates are running lower than the Bank of Canada assumed in its October forecast. In the near term, there is limited prospect for the core inflation to move sharply higher given that the economy is still running with excess slack."
