Canadian Consumer Price Index (October 2022)

Leslie Preston, Managing Director & Senior Economist  | 416-983-7053  

Date Published: November 16, 2022

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Higher prices at the pump keep inflation elevated in October

  • Consumer price inflation held steady in October, at 6.9% year-on-year (y/y), matching September's pace.  
  • Higher gasoline prices in October were a key culprit keeping inflation elevated. Prices at the pump surged 9.2% in October, after three months of decline, and are up 17.8% versus a year ago. 
  • Food inflation did ease very slightly, with prices up 10.1% y/y in October, down from 10.3% in September. Food purchased from stores was up 11% y/y.
  • The signals from various core inflation measures were mixed. CPI ex-food and energy was 5.3% higher versus a year ago, a tick lower than 5.4% in September. However, the average of the three Bank of Canada core inflation metrics remained unchanged (after rounding) at 5.4% y/y. Perhaps more importantly, the two measures that the BoC has indicated provided a more timely gauge of underlying inflation through the pandemic - CPI-trim and CPI-median, both picked up a tick to 5.3% y/y and 4.8% y/y respectively.
  • Shelter inflation accelerated in October, up 6.9% y/y, versus 6.8% in September, despite a cooling in homeowners replacement costs (+6.9% y/y from 7.7% y/y in September). Upward pressure came from higher mortgage interest costs (+11.4% y/y) – which saw the highest increase since 1991 – and rents (+4.7% y/y versus 4.2% in September).   

Key Implications

  • Today's inflation report underscores the need for the Bank of Canada to keep the pressure on interest rates to help bring down inflation. October's CPI report is one of two key remaining data releases before the Bank of Canada's next rate decision in three weeks, and it certainly ticks the box for another 50 basis point increase. 
  • The other key piece of data will be the November jobs report in a couple of weeks. As outlined in our recent report on job vacancies Canada's labour market remains very tight. Even if we see a weak report, it is unlikely to move the needle enough on the job market to move the BoC off its tightening bias.