Canadian consumers felt a sharper pinch at the grocery store last month, as food prices climbed at their quickest annual rate in two years. This surge occurred even as the country's headline inflation rate remained unchanged, according to the latest data from Statistics Canada released on Monday.
Grocery Bills Climb Sharply
The statistics agency reported that the price of food purchased from stores jumped by 4.7 per cent in November compared to a year earlier. This marks a significant acceleration from the 3.4 per cent increase recorded in October and represents the most rapid pace of food inflation since December 2023.
Within the grocery basket, certain items saw dramatic price hikes. The cost of fresh and frozen beef soared by 17.7 per cent year-over-year, a spike driven partly by low cattle herd sizes across North America. Coffee prices also surged, rising by a staggering 27.8 per cent due to a combination of adverse weather conditions in producing regions and U.S. tariffs on coffee-exporting countries.
Headline Inflation Holds Steady Amid Cooling Core Measures
Despite the pressure from food costs, Canada's overall Consumer Price Index (CPI) held firm at 2.2 per cent for November, matching the rate from the previous month. More notably, key measures of core inflation, which strip out volatile components, showed signs of cooling for the first time in several months.
The CPI-median, a core inflation measure, rose by 2.8 per cent, dipping below three per cent for the first time since May. Similarly, CPI-trim also increased by 2.8 per cent, falling below the three per cent threshold for the first time since March. CPI excluding food and energy rose by 2.4 per cent, while CPI excluding gasoline was up 2.6 per cent.
Factors that helped keep the overall inflation rate in check included slower price growth for services compared to October and lower prices for travel tours and accommodation. The drop in accommodation prices was largely a base-year effect, stemming from a spike in hotel costs during the Taylor Swift concerts in Toronto in November 2024.
Bank of Canada's Stance and Looking Ahead
The new inflation data follows the Bank of Canada's recent decision on December 10 to hold its policy interest rate steady at 2.25 per cent. Governor Tiff Macklem stated the rate was "at about the right level" to guide inflation back to the bank's two per cent target and support the economy through structural adjustments related to the trade war with the United States.
However, the central bank anticipates some volatility in headline inflation figures in the coming year. This expected choppiness reflects the temporary GST/HST holiday on certain goods and services that was in effect a year ago. The Bank of Canada also noted that, for now, underlying inflation remains around 2.5 per cent.
Other notable price movements in November included a slowdown in rental inflation, which eased to 4.7 per cent from 5.2 per cent in October. Conversely, the cost of cellular services accelerated sharply, rising 12.7 per cent compared to 7.7 per cent the month before. Gasoline prices continued to decline, but at a slower pace, falling 7.8 per cent year-over-year after a 9.4 per cent drop in October.
The data reveals that inflationary pressures remain uneven across the economy. In November, prices were still rising above three per cent for 42.2 per cent of the items in the CPI basket, indicating that while the overall trend is moderating, significant cost pressures persist in many sectors.
