Canada’s Inflation Rate

TORONTO (Reuters) – Canada’s annual inflation rate unexpectedly slowed to 1.9% in November, attributed to a broad-based price slowdown. The consumer price index remained unchanged month-on-month, as per data released on Tuesday.

Market Reaction: CAD/

Commentary

Robert Both, Macro Strategist, TD Securities
"The core inflation momentum is certainly something that is going to give the Bank of Canada (BoC) a little pause. However, given the slack in the economy, particularly in the labor market, the BoC may still be comfortable cutting by 25 basis points in January."

Doug Porter, Chief Economist at BMO Capital Markets
"The numbers were slightly lower than expected, indicating that Black Friday discounts were more intense than anticipated. However, the core inflation actually ticked higher compared to the previous month. Thus, the BoC may not perceive this as good news, as it doesn’t significantly alter the outlook, but it suggests a more cautious approach to rate cuts as we move into 2025."

Andrew Grantham, Senior Economist, CIBC Capital Markets
"Policymakers will find it challenging to assess the underlying inflation trend in the coming months. December figures will likely be affected by the mid-month initiation of a GST holiday on specific goods/services, while the GST reinstatement in mid-February will temporarily elevate CPI readings. The bank's assessment of economic slack, along with upcoming employment data, will play a critical role in shaping policy decisions."