Canadian Consumer Price Index (November 2025)

Inflation steady in November, with signs of cooling in underlying measures 

• Headline CPI inflation for November came in at 2.2% year-on-year (y/y), matching October's pace and broadly in line with expectations.
• However, inflation at the grocery store heated up in November, with prices up 4.7% y/y, up from 3.4% in October and the fastest pace of increase in nearly two years. November's acceleration was driven by fresh fruit prices (+4.4% y/y), while beef (+17.7% y/y) and coffee (+27.8% y/y) prices continued to be big contributors to grocery inflation.
• There was some offset from prices at the pump, which are still down 7.8% from a year ago in November, but were up on the month. Overall goods prices are up 1.5% y/y, but durable goods prices are up a hotter 2.7% y/y. Durable goods inflation has picked up this year, after being in deflation in 2024.
• Service inflation took a step down in November to 2.8% y/y (3.2% y/y in October) driven by lower prices for travel tours (8.2% y/y). Traveler accommodation was also down 6.9% y/y, benefiting from a comparison to elevated hotel prices a year ago due to the Taylor Swift concert in Toronto. But it wasn't all special factors, rent inflation also slowed to 4.7% y/y from 5.2% in October amid broad-based slower rent growth across regions. 
• The Bank of Canada has focused on broader "underlying inflation" recently, but looking at their official core inflation metrics (median and trim), both cooled below 3% or the first time since March, running at 2.8% y/y in November. Zeroing in on trends over the past three months, core inflation is running closer to the Bank of Canada's 2% target, with trim and median inflation running at 2.4% and 2.2%, respectively, on a three-month annualized basis.

Key Implications

• November's inflation report underscored why the Bank of Canada has not seemed overly worried about inflation trends in recent months. Underlying inflation is still above the 2% target, but it is getting a lot closer in recent months.
• Looking ahead, Canadian inflation is likely to see some choppiness. December's inflation will be boosted by comparisons to last year's GST holiday. But overall, we expect inflation to moderate to the Bank's target over the next year (see recent forecast), as past inflation problem areas, like rents, continue to cool. 

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