MNI 5 THINGS: Canada Nov CPI -0.4% M/M, Led By Lower Energy>

By Yali N'Diaye

     OTTAWA (MNI) - The following are the key points from the November 

data on the Canadian Consumer Price Index released Wednesday by 

Statistics Canada: 

     - Headline unadjusted CPI fell 0.4% in November from October, as 

expected by analysts in a MNI survey. The decline was led by lower 

gasoline prices, as expected, although 5 of the 8 main categories posted 

monthly declines. Gasoline prices fell 9.4% on the month, the largest 

drop since January 2015. Excluding gasoline, CPI edged down 0.1%, as it 

did excluding energy. 

     - Food (+1.0%), shelter (+0.2%), and alcoholic beverages and 

tobacco products (+0.1%), were the three categories to record higher 

prices on the month. Amid ongoing monetary policy tightening, mortgage 

interest costs continued to rise at a steady pace of 0.6% on the month, 

making it the fourth largest upward contributor to the monthly index. 

     - On a 12-month basis, total CPI rose 1.7%, slightly less than the 

1.8% gain expected by analysts in a MNI survey. The slowdown from 2.4% 

in October was also led by gasoline prices, which fell 5.4%, recording 

their first 12-month decrease since June 2017 and the largest since 

August 2016. Excluding gasoline, CPI was up 1.9%, in line with the Bank 

of Canada's 2.0% target. The central bank has already signaled that its 

inflation projections will likely be revised down from last October as a 

result of lower oil prices. There was also an unfavorable base effect in 

November as headline CPI rose 0.3% in November 2017, including a 7.4% 

monthly gain in gas prices. Of note, methodology changes were introduced 

for the telephone and multipurpose digital devices indices: the hardware 

component of the first index was moved to the second index. The 

telephone services index, which now reflects more services, rose 0.5% on 

the month after a 3.1% gain in October (that still reflects the old 

methodology). On a year-over-year basis, the index fell 1.9%, making it 

the third downward contributor.   

     - The BOC will more likely focus on its three preferred measures of 

underlying inflation. Those all came in at 1.9%, down from a range of 

1.9% to 2.1% in October. While they remain close to the 2.0% target, two 

of them edged down, including a 0.2-point decline for the CPI-trim. 

     - On a seasonally adjusted basis, CPI fell 0.2% on the month, after 

increasing 0.3% in October. But it rose 0.1% excluding food and energy, 

following a 0.4% gain the previous month. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

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