MNI DATA IMPACT: Canada Oct. Inflation Rate Steady at +1.9%>

By Greg Quinn and Anahita Alinejad

     OTTAWA (MNI) - Canada's inflation rate was steady for a third month 

at 1.9% led by mortgages and car insurance, affirming the central bank's 

view the economy is close to potential and doesn't need fresh stimulus. 

     Core inflation averaged 2.1% in October, matching gains in May and 

July that were the fastest since 2012. Consumer prices climbed 0.3% in 

October from September, which like the headline rate matched the median 

MNI economist estimate.

     Mortgage interest costs rose 7% and car insurance premiums by 9% in 

October from a year earlier, Statistics Canada reported Wednesday from 

Ottawa. The main downward pressure was a 6.7% fall in gasoline, and 

excluding that item inflation advanced 2.3%. 

     The Bank of Canada has resisted a global wave of rate cuts this 

year citing inflation projected to stick close to a 2% target. Senior 

Deputy Governor Carolyn Wilkins also said in a speech Tuesday the 

economy is in a good place overall amid global trade fights, and cutting 

interest rates could boost risks related to high consumer debts. 

     Mortgage interest costs have become a prominent source of inflation 

even with the BOC's key rate at just 1.75%, mostly because consumer 

debts have surged to record highs. Canada's long housing boom also shows 

up in the CPI report as a key source of inflation with a 3.7% rise in 

rents in October from a year earlier. 

     Passenger vehicle costs also climbed 1.8%, another sign of robust 

consumer spending on big-ticket items that often require household 

borrowing. Those prices climbed by at least 2.7% in the eight previous 

reports, Statistics Canada said.   

     Another sign of healthy inflation pressure that makes Canada 

different from other nations where central banks have cut rates this 

year is the 2.3% gain in CPI excluding gasoline. The three prior reports 

showed that indicator at 2.4%.   

--MNI Ottawa Bureau +1-613-314-9647; greg.quinn@marketnews.com

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