| Consensus | Consensus Range | Actual | Previous | |
| CPI - M/M | 0.1% | 0.0% to 0.2% | 0.1% | 0.2% |
| CPI - Y/Y | 2.3% | 2.2% to 2.3% | 2.2% | 2.2% |
| Core CPI - M/M | -0.4% | 0.7% | ||
| Core CPI - Y/Y | 2.4% | 2.7% |
Highlights
Consumer prices edged up 0.1 percent in November from the previous month, in line with the consensus in an Econoday survey of forecasters. The 12-month rate came in at the lower end of expectations at 2.2 percent, the same as in October, compared to a consensus of 2.3 percent.
The Bank of Canada pointed out in its December 10 policy statement that at 2.2 percent, the CPI was close to target. With a reading still at this level in November, today's data are unlikely to derail the central bank from its pausing mode.
Excluding food and energy, prices declined 0.4 percent on the month, for a 12-month gain of 2.4 percent. Food prices were up 1.3 percent on the month and 4.2 percent from a year ago. Grocery prices increased 1.9 percent from October, the largest monthly gain since January 2023. Lower cattle inventories in North America pushed up beef prices and adverse weather in growing regions lifted coffee prices against the backdrop of U.S. tariffs. Energy prices increased 1.8 percent on the month but were down 5.1 percent year-over-year.
The Bank of Canada's own core inflation readings showed further signs of easing: while the CPI-common ticked up to 2.8 percent in November from 2.7 percent in October, the CPI-median and the CPI-trim both came down to 2.8 percent from 3.0 percent in October. The average of the three measures slowed to 2.8 percent in November from 2.9 percent in October and 3.0 percent in September, a reassuring trend for the central bank. The BoC contrinues to assess that underlying inflation is still around 2.5 percent and warned that CPI could increase in the short term due to last year's GST/HST tax holiday on some goods and prices. With its own readings showing signs of easing, expectations of a rate hike in mid-2026 triggered by stronger-than-expected GDP and jobs reports have less ground. Overall, the status quo is unchanged.
Goods prices increased 0.6 percent from October and 1.5 percent from November 2024, while services decreased 0.3 percent on the month for a 2.8 percent 12-month advance.
Three of the top five upward contributors to the all-item monthly CPI gain were in the food category: fresh vegetables were up 6.8 percent, fresh fruit up 4.5 percent and bakery products up 2.9 percent. Gasoline, up 1.8 percent, was the second highest contributor, and electricity the fifth upward contributor with a 1.5 percent increase. On the downside, a 12.0 percent drop in travel tours was the main downward contributor. Homeowners' replacement cost, down 0.4 percent, was the fourth downward contributor.
On a 12-month basis, rent, up 4.7 percent, was the largest upward contributor, while gasoline, down 7.8 percent, was the largest downward contributor.
Six of the eight main categories posted monthly increases in November, including shelter, up 0.1 percent. Household operations, furnishings and equipment prices, down 0.5 percent, and alcoholic beverages, tobacco products and recreational cannabis, down 2.0 percent, were the two categories recording monthly declines.
Prices increased for all major categories year-over-year.
On a seasonally adjusted basis, prices edged up 0.2 percent on the month, up from 0.1 percent in October. Excluding food and energy, the index increased 0.1 percent after 0.2 percent.
Market Consensus Before Announcement
CPI expected up 0.1 percent on month in November and 2.3 percent on year after gains of 0.2 percent and 2.2 percent in October.
Definition
The Consumer Price Index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI provide widely used measures of inflation. The policy target measure for the Bank of Canada (BoC), the annual CPI rate can be distorted by swings in the more volatile subsectors so the central bank also monitors an adjusted measure of the CPI that excludes a range of volatile categories in order to get a better handle on underlying trends.
Description
The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as Canada, where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
As the most important indicator of inflation the CPI is closely followed by the Bank of Canada. The Bank of Canada has an inflation target range of 1 percent to 3 percent but focuses on the 2 percent midpoint. It uses the CPI and three measures of the underlying rate as the prime inflation indicators. Markets also look at core rate which excludes food and energy.