Canadian Consumer Price Index (November 2021)

James Marple, Senior Economist | 416-982-2557

Date Published: December 15, 2021

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Canadian inflation stays put at 4.7% in November 

  • Consumer price inflation held steady at 4.7% year-on-year (y/y) in November. Once again, energy prices were the biggest contributor, up 26.4% (from 25.5% in October), led by gasoline (up 43.6%). Excluding energy, prices were up 3.3%, the same as October.
  • Food price growth accelerated again, up 4.4% y/y (from 3.8% in October), led by meat (up 9%). Clothing prices, meanwhile, continued to rebound, up 0.7% (from 0.6%). Shelter prices were unchanged at a robust 4.8%, while recreation, reading and education prices slowed to 2.5% (from 3.4%).
  • Seasonally adjusted, month-on-month price were up 0.3%, slowing from 0.6% in October. Prices gains were led by clothing and footwear (+1.3%), food (+0.4%), and transportation (+0.4%). Recreation, education and reading prices fell 0.6% on the month.
  • Two of three of the Bank of Canada's core inflation metrics were unchanged in November. CPI-trim remained steady 3.4% and CPI-median at 2.8%. The CPI-common measure rose to 2.0% (from 1.8%).   

Key Implications

  • Surprise, surprise, inflation remained hot in November. Even with some welcome slowing in the monthly rate of price growth, the strong headline rate just shy of 5% will capture headlines. What is more, prices are up noticeably at the grocery store, where people can really feel them (or taste them?). 
  • Worries about Omicron have contributed to lower oil prices, but beyond that the restrictions on mobility necessary to fight the rapidly-spreading variant will do little to help on the inflation front and may exacerbate price pressures in some areas. Supply chain disruptions are likely to be prolonged. Demand may take a hit, but with people staying home, it will be redirected toward goods, keeping upward pressure on already-elevated prices.
  • The Bank of Canada updated its mandate to add employment considerations, but the inflation target remains firmly at its center. With employment above its pre-pandemic level, both labor market and price metrics argue for a withdrawal of policy support. The risks to the economy from Omicron may give the Bank immediate pause, but rate hikes are likely to be necessary to bring inflation toward the 2% goal. We expect a total of four rate hikes over the course of 2022, with lift off starting in April.