OTTAWA (Reuters) – Canada’s annual inflation rate unexpectedly slowed by a tick to 1.9% in November, driven by a broad-based slowdown in prices, and the consumer price index was unchanged on a monthly basis, data showed on Tuesday.
Analysts polled by Reuters had forecast that inflation would hold steady at the 2% rate recorded in October and the consumer price index would rise 0.1% month-over-month.
Prices for travel tours and the mortgage interest cost contributing the most to the deceleration in the annual inflation rate, Statistics Canada data showed.
The Canadian central bank’s preferred measures of core inflation, CPI-median and CPI-trim, were unchanged, though previous month’s data were revised up by a notch.
CPI-median – or the value at the middle of the set of price changes in a month – remained at 2.6%, and CPI-trim – which excludes the most extreme price changes – stayed at 2.7%.
Tuesday’s data was the first of two inflation reports that the Bank of Canada will get to assess before the bank’s next rate decision on Jan. 29.
The central bank, tasked with keeping inflation under control, has cut interest rates by 50 basis points at each of its last two policy announcements to bring the cumulative reduction in borrowing costs to 175 bps since June.
After the substantial reduction in interest rates, triggered by the return of inflation to the bank’s target this year, BoC Governor Tiff Macklem indicated last week that further cuts would be more gradual.
While prices for travel tours was a leading contributor the small decline in headline inflation, cost of travel services declined less in November than in October, Statscan said, noting that higher hotel prices coincided with a series of high-profile concerts in the month.
Mortgage interest cost inflation, the other top contributor to slower headline figure, decelerated the 15th consecutive month to 13.2% in November from 14.7% in October.
Grocery prices rose 2.6 on an annual basis in November, down from 2.7% in the month earlier, while gasoline prices fell 0.5% after falling 4% in October.
Excluding volatile food and energy, prices rose 1.9% in November compared with a 2.3% rise in October.
(Reporting by Ismail Shakil in Ottawa; Editing by Dale Smith)
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