Canadian CPI Exceeds Expectations in November

Canadian CPI and Core CPI both exceeded analyst expectations for the month of November, Statistics Canada reported on Friday December 19th.

Core CPI increased by 0.7% MoM while the Consumer Price Index posted a drop of 0.3% over the same period. Expectations had been for a 0.2% drop in the Core number and a much sharper 0.7% fall in all-items consumer prices.

Despite the better than expected inflationary figures, the annual rate of inflation for the CPI all-items fell to 2.0% from 2.6% in October. A figure of 1.6% had been predicted. However, the closely watched Core CPI increased to 2.4% from 1.7% in the previous month. A slight decrease to 1.5% had been expected.

Core consumer prices is the BOC’s preferred indicator when considering interest rates and the sharp increase may complicate the Bank’s aggressive rate easing cycle. However, the need to stimulate the economy in the face of global recession is likely to take priority over inflationary worries. The BOC’s Overnight Rate currently stands at 1.50% after a cut of 75 basis points on December 9th.