Canada’s yearly inflation rate remained steady in November, with grocery prices seeing a notable increase, according to Statistics Canada. The overall inflation rate stood at 2.2 percent, but food inflation has been surpassing this rate since August 2024, rising by 4.7 percent compared to the previous year, marking the largest jump in grocery price growth since December 2023.
The spike in grocery prices was driven by higher costs of fresh fruit, particularly berries, and other food preparations, mainly processed foods. Coffee prices continued to rise sharply, increasing by 27.8 percent year-over-year in November, attributed to adverse weather conditions in coffee-growing regions and U.S. tariffs. Additionally, beef prices, both fresh and frozen, surged by 17.7 percent last month, impacting inflation due to diminishing cattle inventories in North America.
RBC senior economist Claire Fan highlighted that the increase in food inflation was influenced by supply-side constraints, including severe weather. Despite Canadian importers not directly facing tariffs, prices in Canada could still be affected by cost increases passed on by U.S. exporters along food manufacturing supply chains.
In contrast, core inflation for the Bank of Canada eased in November, with prices for services growing at a slower pace. Travel tours and accommodations experienced a decline in costs, partly due to a base-year effect related to increased tourism spending in Toronto during the same period last year. Rent prices also showed a slower annual growth rate of 4.7 percent in November compared to 5.2 percent in October.
While services inflation decreased, cellular service prices rose by 12.7 percent in November, up from 7.7 percent in October, attributed to fewer promotions offered compared to the previous year. The Bank of Canada’s core inflation measures, excluding volatile components like food and gas, either eased or remained stable in November, indicating that significant interest rate hikes are unlikely in the near future.
Fan suggested that while the central bank may not need to implement rate hikes immediately, the economy has displayed improvements that may not necessitate further cuts to the overnight rate. The Bank of Canada recently signaled that it has halted rate reductions for the time being.