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Inflation edged down slightly to 1.9 per cent in November as price growth continued to stabilize in Canada.
Statistics Canada’s consumer price index report Tuesday showed inflation was down from two per cent in October.
Shelter costs increased at a slower annual pace of 4.6 per cent, while rent price inflation accelerated to 7.7 per cent.
Grocery prices continued to grow faster than overall prices, rising 2.6 per cent from a year ago.
"Inflation decelerated slightly in November, ahead of what will be a volatile period for CPI readings thanks to the temporary reduction in GST on certain items," said CIBC senior economist Andrew Grantham in a note to clients. The federal government announced last month it would waive the five per cent sales tax on some products between Dec. 14 and Feb. 15.
Meanwhile, he said the impact of the Taylor Swift concerts on inflation was weaker than expected.
"While there was a pop in hotel prices, there was no noticeable change in airline fares, restaurant prices or other areas," Grantham said.
Inflation has hovered around the Bank of Canada's two per cent target for several months now, clearing the path for the bank to lower interest rates.
After delivering a second consecutive half-percentage point rate cut last week, governor Tiff Macklem signalled there would be more rate reductions coming, but that the central bank was to likely decrease the size of cuts.
The central bank’s key interest rate now stands at 3.25 per cent.
Douglas Porter, chief economist at BMO Capital Markets, said the latest report points to a more gradual path for rate cuts in 2025.
"While we expect a further trim on Jan. 29, another meaty set of core readings next month will prompt some chattering about a pause, especially with the (U.S.) Fed seemingly headed that way in January and the loonie on the ropes," he said in a note to clients.
Tuesday’s report showed the Bank of Canada’s preferred core measures of inflation held steady at 2.6 and 2.7 per cent.
The overall slowdown in inflation comes as goods price inflation grinds to a halt, while high wage growth and rising housing costs continue to push up service prices.
This report by The Canadian Press was first published Dec. 17, 2024.