In November, Canada’s annual inflation rate remained unchanged, maintaining the 3.1% increase recorded in October, according to the latest Consumer Price Index (CPI) from Statistics Canada. The monthly CPI saw a marginal 0.1% uptick.

Mortgage interest costs, soaring by 29.8% annually, and rent, which saw a 7.4% increase, were the primary drivers of the inflation rate. Despite their continued elevation, mortgage interest costs experienced a slight annual easing, while rent faced its first decline since July. Increased prices for travel tours, rising by 26.1% annually, also contributed to the overall CPI acceleration in November.

However, slowing food inflation, at 5% annually compared to October’s 5.6%, and a modest cooling of shelter prices, up 5.9% versus October’s 6.1%, provided some offsetting pressure. Energy prices exhibited a more significant decline in November, falling by 5.7% annually, attributed to lower fuel oil prices, which dropped by 23.6%, partly due to the temporary suspension of the federal carbon levy. On the other hand, electricity prices rose by 8.2%, mainly due to increased time-of-use rates in Ontario.

Grocery prices recorded a 4.7% increase, marking the fifth consecutive month of a gradual slowdown in annual price growth.

While inflation remains above the Bank of Canada’s (BoC) 2% target, the BoC’s preferred measures of core inflation—CPI trim and CPI median—held steady at 3.5% and 3.4%, respectively. However, on a three-month annualized basis, CPI trim slowed to 2.6%, and CPI median fell to 2.3%, the slowest pace since early 2021. This suggests a potential downward trajectory for the annual inflation rate in the coming months, according to Leslie Preston, Managing Director at TD Economics.

On the contrary, Douglas Porter, Chief Economist at BMO, expressed disappointment in November’s inflation figures. Despite varying opinions on the short-term trajectory, both Preston and Porter concurred that, with underlying inflation decreasing and Canada’s economy cooling, the BoC might initiate interest rate cuts in mid-2024, contingent upon further inflation softening.