Canadian inflation ran hotter than expected in October, potentially jeopardizing another super-sized interest rate cut next month.
Statistics Canada’s consumer price index rose 2% on a year-over-year basis last month, topping the 1.6% increase seen in September and slightly exceeding analyst and economist expectations for a 1.9% gain. It also marked the first time the annual inflation rate has ticked higher since May.
Much of the October increase in the headline inflation rate was attributed to gasoline prices, which fell only 4% last month on a year-over-year basis versus the 10.7% fall seen in September. On a monthly basis, prices for gasoline were up 0.7% in October, following a 7.1% decline in September.
Prices for food purchased from stores contributed to higher October inflation as well. Grocery prices were up 2.7% in October, topping the previous month’s 2.4% advance - the third consecutive month price growth for groceries outpaced headline inflation. The increase in grocery prices was led by fresh vegetables (+7.3%) as well as preserved fruit and fruit preparations (+7.6%). On the other hand, prices for fresh or frozen beef were up a more modest 7% in October compared to a 9.2% gain in September.