Canada’s yearly inflation rate remained steady in November, with grocery inflation hitting its highest level in almost two years, according to Statistics Canada’s latest report. The overall inflation rate held at 2.2 percent, but food prices have been surging since August 2024, rising by 4.7 percent compared to the same period last year in November, marking the most significant increase in grocery price growth since December 2023.
The spike in prices was mainly driven by fresh fruit, particularly expensive berries, and “other food preparations” which mostly consist of processed foods. Coffee prices continued to soar, increasing by 27.8 percent year-over-year in November due to adverse weather conditions in coffee-growing regions and U.S. tariffs. Additionally, fresh and frozen beef prices surged by 17.7 percent last month, contributing to inflation, partly influenced by declining cattle inventories in North America.
RBC senior economist Claire Fan highlighted that the surge in food inflation was a result of various supply-side challenges, including severe weather conditions. She also pointed out that even though Canadian importers are not directly subjected to tariffs, prices in Canada could be impacted by U.S. exporters passing on their increased costs along the food manufacturing supply chains.
Moving away from groceries, prices for services experienced slower growth in November, particularly in travel tours and accommodations. This slowdown was influenced by a base-year effect, as Toronto witnessed a spike in tourism spending during the same period last year due to Taylor Swift’s concert series at Rogers Centre. Rent prices also saw a moderated pace of growth, increasing by 4.7 percent year-over-year in November compared to 5.2 percent in October.
While there was a decrease in inflation for services, this was offset by higher prices for cellular services, which surged by 12.7 percent in November, up from 7.7 percent in October, attributed in part to fewer promotions available compared to the previous year. The Bank of Canada’s core inflation metrics, which exclude volatile elements like food and gas, either eased or remained stable in November, signaling that immediate interest rate hikes are unlikely. Fan emphasized that while the economy has shown signs of improvement, further cuts to the overnight rate are not anticipated as the Bank of Canada recently indicated a pause in rate reductions.