Canada: Inflation rises in October
Latest reading: Inflation came in at 2.0% in October, up from September’s 1.6% and above market expectations. October’s figure was in the center of the Central Bank’s 1.0%–3.0% target range. The reading was driven by rising price pressures for transportation.
The trend pointed down slightly, with annual average inflation coming in at 2.6% in October (September: 2.7%). Meanwhile, core inflation ticked up to 1.7% in October from September’s 1.6%.
Lastly, consumer prices rose 0.43% in October over the previous month, contrasting September’s 0.43% fall. October’s figure was the highest reading since May.
Panelist insight: On the reading and monetary policy implications, Goldman Sachs analysts said:
“We view the increase in sequential inflation in October as mostly reflecting backward-looking annual resets (i.e. property taxes), an uptick in volatile components (including gasoline, fuels, communications, and inter-city transportation), and payback from categories that undershot relative to fundamentals in prior months (most notably clothing). […] Given ongoing activity weakness, we continue to expect that the BoC will deliver a 50bp cut at their December 11th meeting, although today’s surprise somewhat raises the risk of a smaller 25bp cut.”