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Canada’s Inflation Rate Remained Steady in November

Canadian Economics

By: Kiefer Van Mulligen

    

In November, the Consumer Price Index (CPI) rose by 2.2 per cent (y/y). This was the same as October’s 2.2 per cent (y/y) increase.

  • Gasoline prices rose by 1.8 per cent month-over-month and were 7.8 per cent lower than a year ago. Food price growth accelerated to 4.7 per cent (y/y) following a 3.4 per cent increase in October.
  • Core CPI (excluding food and energy) grew by 2.4 per cent in November (y/y), down from 2.7 per cent in October. Rent, purchases of passenger vehicles, and food purchased from restaurants were key contributors to year-over-year CPI growth.
  • On a seasonally adjusted basis, the CPI rose by 0.2 per cent from the previous month (following a 0.1 per cent increase in October).
  • The average of the Bank of Canada’s two preferred core inflation measures decreased to 2.8 per cent (y/y) in November from 3.0 per cent in October. Both CPI-median and CPI-trim fell to 2.8 per cent (both down from 3.0 per cent in October)

Key insights

Canada’s CPI grew by 2.2 per cent in November, comfortably near the Bank of Canada’s 2.0 per cent target. Given their weight in the CPI, upward pressures stemmed in part from some shelter-related costs. Rent, for example, grew by 4.7 per cent (year-over-year), though this was down from a 5.2 per cent increase in October. Passenger vehicle prices were also a top contributor to overall price growth and were up by 3.7 per cent. However, the pace of overall price growth was tempered primarily by gasoline prices, which are still markedly lower than at the same time last year due to the removal of the consumer carbon tax. Lower prices for travel tours and natural gas also helped to temper the overall rate of CPI growth.

Inflation readings will be volatile over the next six months. Last year, the federal government’s GST/HST holiday lowered the prices for many items in the CPI, particularly restaurant meals. As these taxes are again included in final consumer prices, the year-over-year comparisons for these items will be notably higher from mid-December to mid-February. Similarly, beginning in April 2026, year-over-year prices for gasoline will no longer reflect the removal of the carbon tax. The downward pull stemming from gasoline prices that has moderated overall inflation over the last year will dissolve.

With inflation near its 2.0 target, the Bank of Canada held interest rates steady in early December. We expect the Bank has reached the end of its current rate-easing cycle. The Bank’s policy rate now sits at the lower end of its neutral range (where monetary policy neither stimulates nor restrains economic growth). While core inflation remains elevated, it will fall as shelter prices continue to decline. With most Canadian counter-tariffs removed at the beginning of September, many immediate inflationary pressures have dissipated. Weak expected consumer demand through the next year will also moderate the pace of price growth. In this context, businesses are reticent to raise prices even as many face higher costs (e.g., from trade disruption).

For more details about the impact of U.S. tariffs and our research on Canada’s place in a changing world, please read more here.

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