Canada’s inflation rate ticks up in October

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Canada’s inflation came in slightly hotter than expected for October, a result that might dampen hopes of another jumbo interest rate cut from the Bank of Canada.

The annual inflation rate hit 2 per cent in October, up from 1.6 per cent the month before, Statistics Canada said Tuesday.

The rate was slightly above economists’ forecasts and mainly due to gas prices falling less in October than they did in September.

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Prices in October increased at a faster annual pace in five out of the eight major components of the consumer price index.

Growth in shelter prices continued to ease in October, rising 4.8 per cent year over year, compared with a 5 per cent increase in September.

But both the Bank of Canada’s preferred measures of inflation accelerated to annual rates of 2.5 per cent and 2.6 per cent.

The upside surprise suggests inflation is a “tad more” sticky than expected, said Royce Mendes, an economist with Desjardins Group, in a note after the data.

“We have more conviction in our call that the Bank of Canada will cut rates just 25 basis points in December,” he wrote, adding that he expects more market participants and economists to migrate to the “quarter-point camp.”

More to come …

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