Canada’s yearly inflation rate remained stable in November, while grocery inflation surged to its highest level in almost two years, according to Statistics Canada. The overall inflation rate held at 2.2 percent, but food prices have been rising more rapidly, increasing by 4.7 percent compared to the previous year, marking the largest spike in grocery prices since December 2023.
The notable increase in grocery prices was primarily driven by fresh fruit, particularly expensive berries, and “other food preparations,” which mostly consists of processed foods. Coffee costs continued to soar, rising by 27.8 percent annually in November due to adverse weather conditions in coffee-growing regions and U.S. tariffs.
Moreover, fresh and frozen beef prices climbed by 17.7 percent last month, contributing to inflation pressures as cattle inventories shrink across North America. RBC senior economist Claire Fan attributed the rise in food inflation to supply constraints, including severe weather conditions and potential cost pass-throughs by U.S. exporters along food manufacturing supply chains.
While grocery prices surged, services’ prices grew at a slower pace in November, with travel tours and accommodations costs decreasing. Rent prices also rose at a slower rate, increasing by 4.7 percent year-over-year in November, compared to October’s 5.2 percent growth.
Core inflation indicators, excluding volatile components like food and gas, either eased or remained steady in November. This trend suggests that the Bank of Canada may not need to raise interest rates in the near future. Fan noted that although the economy has shown signs of improvement, additional cuts to the overnight rate may not be necessary, as the Bank of Canada has signaled a pause in rate cuts.
