The Consumer Price Index (CPI) rose 2.2% on a year-over-year basis in October, down from a 2.4% increase in September, according to a report released Monday by Statistics Canada.
The all-items CPI decelerated largely due to gasoline prices, which fell at a faster pace year over year in October (-9.4%) compared with September (-4.1%). Excluding gasoline, the CPI rose 2.6% in October, matching the increase in September, said the federal agency.
Slower growth in grocery prices further contributed to the deceleration in the CPI in October, which was moderated by higher prices for cellular phone plans, it said.
The CPI rose 0.2% month over month in October. On a seasonally adjusted monthly basis, the CPI was up 0.1%, added Statistics Canada.
“Prices at the pump fell at a faster pace year over year in October (-9.4%) compared with September (-4.1%), resulting from a 4.8% month-over-month decline in October. The monthly decline was largely due to a switch to cheaper winter blends, as well as lower crude oil prices amid continued concerns of oversupply,” said Statistics Canada.
“Year over year, prices for food purchased from stores rose 3.4% in October, down from a 4.0% increase in September. Though grocery prices decelerated in October, prices remained elevated and have exceeded overall inflation for nine consecutive months. The deceleration was due in part to prices for other food preparations (+3.2%), which mostly includes processed foods, as well as prices for fresh vegetables (-1.4%). Partially offsetting the slowdown was higher prices for fresh or frozen chicken (+6.2%), after a 1.5% increase in September.
“On a month-over-month basis, grocery prices fell 0.6% in October, the largest decline since September 2020 (-1.1%).”
Andrew Grantham, Senior Economist, CIBC Capital Markets, said Canadian inflation eased in October, albeit only partly offsetting the pick up seen in the previous month.
“Overall, while inflation decelerated in October, the move was in line with expectations and it would take a longer period of easing price pressures, combined with indications of economic growth deteriorating again, to bring the Bank of Canada back off the sidelines. We continue to forecast no change in the overnight rate through to the end of next year,” he said.
Andrew Hencic | Director & Senior Economist, TD Economics, said: “The takeaway here is that top line inflation came in as expected while the various underlying measures continues to hover in-and-around the target range – with some heating up and others cooling off.
“The Bank of Canada delivered a cut at their past meeting and signaled there wasn’t much more they could do in the current economic environment – a view we have shared for some time. This month’s report doesn’t change the story much, inflation is unlikely to fall below the lower end of the target range given the disruptions on the supply side of the economy, but it’s also unlikely to sharply accelerate amid expectations for tepid domestic demand. Markets remain on the same page, putting the odds of a cut by next April at roughly 30%.”
Douglas Porter, Chief Economist at BMO Capital Markets, said: “On the surface, this looks to be a mildly friendly report with headline and median inflation rates dipping. However, the sources of relief were well-known ahead of time, and the new news here is not great, driven by persistent strength in insurance costs and a snap higher in cell charges. Overall, this does little to change the BoC’s view that underlying inflation remains close to 2-1/2%; but, if anything, most underlying metrics have been stuck a bit above that, or have just crept up there. In other words, this report is just another reason to believe the Bank is moving to the sidelines in December.”
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