MNI: Canada Oct Inflation Steady at 6.9%, Core Rates Tick Up

Canada's inflation rate was unchanged at 6.9% in October while core prices edged back toward record highs, the last such figures central bankers see before deciding whether to hike another 50bps next month or to step back to a quarter-point move.

Consumer prices climbed 0.7% on a monthly basis, less than the 0.9% economists predicted, and the year-over-year pace also lagged the forecast of 7%. Headline inflation is still closer to June's four-decade high of 8.1% than the Bank of Canada's 2% target that policy makers say won't be reached until the end of 2024.

The "median" core index the preferred by the BOC quickened to 4.8% from 4.7%, close to the record 4.9% set in June. The "trim" core index also moved up to 5.3% from 5.2%, also nearer to the record of 5.5%. The Bank recently abandoned its focus on the "common" core measure.

Food prices rose 10.1% in October from a year ago following September's 10.3% pace, while mortgage interest costs rose 11.4% in the fastest gain since February 1991. Gasoline prices rose 17.8% on a 12-month basis, and swung to a 9.2% increase in October from a 7.4% decrease in September.

Bank of Canada Governor Tiff Macklem has said the end of the rate cycle is nearing and economists surveyed by MNI have been split on whether the move on Dec. 7 will by 25bps or 50bps. The Bank hiked 100bps in July, 75bps in September and 50bps in October and predicts a period of slow growth or recession is coming.

Inflation has exceeded the Bank’s 2% target since March 2021. The Bank of Canada’s last quarterly survey showed about four in five executives saw inflation topping 3% over the next two years, putting it outside the Bank’s 1%-3% target band.