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Many of us may be powering down for some holiday R&R, but inflation is still hard at work, making our lives even more expensive.
What happened: Canada’s consumer price index rose 6.8% in November from a year ago, a slight drop from 6.9% seen in October (driven down mainly by lower gas prices), but core inflation measures, excluding volatile food and energy prices, remain stubbornly high.
- Food prices rose 11.4% year-over-year, up 0.4 percentage points from October. Prices for staples including chicken, eggs, coffee, and cereal, rose the most.
- Mortgage interest costs soared by 14.5%, the biggest jump since 1983. Payments for the average detached home are now almost 70% of a median household’s income.
Why it matters: Persistently high inflation in core consumer goods, like food and shelter, makes it less likely the Bank of Canada (BoC) will pause interest rate hikes in the short-term.
- Markets are now pricing in the odds of a 0.25 percentage point rate bump in January at around 65%, compared to 50% before the new inflation numbers dropped.
- That means homeowners struggling with ballooning mortgage payments or people with lots of increasingly pricey debt should not expect relief to come anytime soon.
Bottom line: Tiff Macklem and the gang at the BoC will get one more inflation data update (for December) before their next rate decision at the end of January. But unless they see some dramatic changes, there’s likely another hike on the way.