Author: Laura Dylan Kane
(Bloomberg) — Inflation held steady in Canada last month, while core indicators broadly cooled, as an acceleration in prices for food and some other goods was offset by slower growth in services prices.
Data released by Statistics Canada on Monday showed that the overall inflation rate increased by 2.2% year-on-year in November, the same as in October. That was below the 2.3% median forecast in a Bloomberg survey of economists.
On a monthly basis, consumer prices rose 0.1%, in line with expectations.
Bond prices rose, pushing the yield on the two-year benchmark government debt down to 2.57 per cent as of 9:48 a.m. Ottawa time. The Canadian dollar retreated against the U.S. dollar.
Annual growth in the Bank of Canada’s two so-called preferred core indicators, the median and adjusted indicators, slowed to 2.8% from 3% previously. On a three-month annualized basis, growth slowed to 2.3% from 2.6% in October.
In recent months, the central bank has given less weight to those two indicators, instead saying a broad range of indicators points to underlying inflation of around 2.5%.
“It does look like some more positive signs of underlying inflation slowing,” Citigroup economist Veronica Clark said on BNN Bloomberg Television, adding that rental costs were showing “some stickiness.”
Core price pressures generally cooled or remained stable in November. Excluding food and energy, prices rose 2.4% year-on-year, down from 2.7% in October. Inflation, excluding gasoline prices, rose 2.6% for the third consecutive month. The bank’s previous core inflation measure – the consumer price index excluding eight volatility components and indirect taxes – was unchanged at 2.9%.
Still, the scope of inflationary pressures has widened, with about 42% of items in the consumer price index rising above 3% annually, up from 34% previously.
All in all, the report showed that headline inflation was trending lower and closer to the central bank’s 2% target, although some underlying inflation measures remained close to 3%. The Bank of Canada is likely to be immune to ongoing core pressures as it sees continued weakness in the Canadian economy as U.S. tariffs hit key industries and weigh on business investment and consumer spending.
The central bank last week held its policy rate steady at 2.25% and reiterated its view that borrowing costs are at an “appropriate level” to support economic growth while keeping inflation under control. Governor Tiff Macklem set a relatively high bar for exiting the sidelines, saying the central bank would respond if there were “new shocks or an accumulation of evidence” that “significantly alters the outlook.”
Policymakers expect inflation to remain close to their 2% target, where they have been for more than a year.
“There are still some signs that underlying inflation remains sticky, with momentum in some core indicators remaining strong and the scope for inflationary pressures increasing,” Charles St-Arnaud, chief economist at Servus Credit Union, said in an email.
“Nevertheless, there is nothing in today’s report that would cause immediate concern for the Bank of Canada that could impact monetary policy in the near term.”
Royce Mendes, managing director and head of macro strategy at Desjardins Securities, said in a note to investors that the data overall suggested “price pressures are generally benign.” “Central bankers can be reassured that a stagflationary environment is not emerging. We continue to believe that downside risks to the economy and inflation will be more relevant in the coming months.”
Mendez said lingering uncertainty over the future of the U.S.-Mexico-Canada deal will weigh on economic activity, while fiscal stimulus won’t be a major factor until later this year.
Falling travel and accommodation prices, as well as slower rental price growth, put downward pressure on headline inflation in November. Rising grocery costs and a smaller drop in gasoline prices were major factors in last month’s increase.
Part of the reason for the drop in travel prices is the base year effect, as was the case with Taylor Swift’s performance in Toronto in November 2024.
Grocery prices rose 4.7% in November, the biggest increase since December 2023, as the cost of fresh fruit rose sharply, while beef and coffee prices remained important drivers.
House prices rose faster in five provinces, led by New Brunswick.
The report is the first of two inflation reports to be released ahead of the central bank’s next interest rate decision on January 28. Traders expect the central bank to keep interest rates steady until at least October 2026, when they may raise rates.
—With help from Mario Baker Ramirez.
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Last modified: December 15, 2025
