Inflation picks up to 1.4%
The annual inflation rate rose to 1.4 per cent in November from 0.9 per cent the month before as housing costs rose and the effect of recent downward pressure from lower gasoline prices began to wear off.
Statistics Canada said prices at the gas pumps dropped just 3.1 per cent between November 2005 and November 2006. That compares with drops of more than 14 per cent during the previous two months.
Homeowners’ replacement costs, which represents the cost of new housing (excluding land), was also a big contributor to the annual rise in the CPI. Alberta was the big factor here. Its new housing costs have soared by more than 45 per cent in the past year. Alberta again led all provinces with an annual inflation rate of 3.7 per cent.
Mortgage interest costs had their largest increase in more than five years. “It was also the first time since March 2003 that interest rates have exerted a positive influence on the rise in mortgage interest cost,” Statistics Canada said.
On a monthly basis, consumer prices rose 0.2 per cent. Rising automobile prices accounted for much of that gain as November is the month when dealers introduce their 2007 models.
The core rate of inflation, which excludes the most volatile items like fuel and fresh produce, edged down a 10th of a percentage point to 2.2 per cent. On a monthly basis, core prices rose 0.3 per cent.
The core inflation rate came in slightly higher than economists’ expectations of 2.1 per cent, while the so-called “headline” rate was slightly lower than the 1.5 per cent expected.
“There are few major surprises in this report, with the underlying theme that core inflation is proving stubbornly sticky above two per cent, much like its U.S. counterpart,” said BMO Nesbitt Burns senior economist Douglas Porter in a morning commentary.
Porter said Canadians shouldn’t look for an interest rate cut soon. “With core inflation still above two per cent, the Bank of Canada is going nowhere fast,” he said.