Lower food prices help slow Canada's inflation rate in November

Vegetables are on display for sale at the Jean Talon Market in Montreal on Jan. 11, 2016. The Canadian Press/Paul Chiasson

The country’s annual inflation rate rang in under expectations last month at 1.2 per cent, largely under the weight of lower food costs, Statistics Canada said Thursday.

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The national inflation reading for November was weaker than October’s rate of 1.5 per cent, the federal agency’s latest consumer price index found.

A consensus of economists had predicted 1.4 per cent inflation for November, according to Thomson Reuters.

The report said lower prices for fresh produce, meat and travel tours – compared to a year earlier – helped pull down the overall inflation rate. For example, the cost of lettuce fell 18.7 per cent, tomatoes dropped 11 per cent and travel tours declined 4.2 per cent.

The federal agency said higher costs for items like automobiles, homeowners’ insurance and electricity helped contribute to the upward forces behind the overall rate. Home and mortgage insurance was up 4.4 per cent compared to the year before, while the cost of purchasing and leasing vehicles rose three per cent and electricity bills climbed 3.5 per cent.

Statistics Canada also released unexpectedly strong figures Thursday for retail trade in October.

They showed that sales in October increased 1.1 per cent compared with September to just over $45 billion. It was the third straight monthly gain.

A consensus of economists had been expecting only a 0.2 per cent increase in retail trade, according to Thomson Reuters.

Statistics Canada said the biggest boosts came from higher sales at gasline pumps, where they rose 3.8 per cent, and at general merchandise stores, which saw an increase of 1.9 per cent.

Revised figures showed that month-over-month retail sales rose 0.8 per cent in September and 0.2 per cent in August. Those increases followed a decline of 0.1 per cent in July.

For the first time, Statistics Canada released also three new measures of core inflation that the Bank of Canada will use to examine the underlying rate.

The change, announced in October, was made in an effort to manage the risks associated with the shortcomings of having just one indicator.

The three new indicators – known as CPI-common, CPI-median and CPI-trim – all showed weaker year-over-year inflation for November than their readings for October. CPI-common had a reading last month of 1.3 per cent, CPI-median had 1.9 per cent and CPI-trim had 1.6 per cent.

SOURCE Andy Blatchford, The Canadian Press