Instant view: Canada’s inflation rate ticks down to 1.9% in November

9:57 am Tuesday, December 17th, 2024

TORONTO (Reuters) – Canada’s annual inflation rate unexpectedly slowed by a tick to 1.9% in November, driven by a broad-based slowdown in prices, and the consumer price index was unchanged on a monthly basis, data showed on Tuesday.

Market reaction: [CAD/]

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COMMENTARY

ROBERT BOTH, MACRO STRATEGIST, TD SECURITIES

“The core inflation momentum is certainly something that is going to give the BoC a little pause. But given the amount of slack in the economy – we are seeing that in the labour market even though there is uncertainty about where potential growth is – the Bank of Canada I think will still be comfortable cutting by 25 basis points in January.”

DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS

“The numbers were a little bit lower than we were expecting, it seems the Black Friday discounting was a bit more intense than expected, but it is notable that the core actually ticked up and revised higher that the month before. So I don’t think the Bank of Canada will see this as particularly good news today, it is not enough to meaningfully change the outlook, but I think it feeds into the view that the Bank will be more cautious in terms of rate cuts as we head into 2025.”

ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS

“It will remain difficult for policymakers to determine the underlying trend in inflation over the next few months, with December figures weakened by the mid-month start of a GST (goods and services tax) holiday on certain goods/services. The reinstating of GST in mid-February will then temporarily boost CPI readings.”

“While the CPI-trim and median measures should be less impacted by such temporary factors, throughout this period the bank’s (Bank of Canada’s) assessment of slack in the economy, including how it views upcoming employment data, should become even more important in determining policy decisions.”

(Reporting by Fergal Smith and Divya Rajagopal; Editing by Caroline Stauffer)