Canada’s inflation rate fell to 3.1 per cent in October led by lower gas prices, Statistics Canada said Tuesday — likely closing the door on more central bank rate hikes.
Gasoline prices fell 7.8 per cent year over year in October.
The largest contributors to the Consumer Price Index increase continued to be mortgage interest costs, food and rent, the agency said.
Grocery prices remained high but continued to decelerate, with the cost of fresh vegetables contributing most to the slowdown.
Rent and property taxes rose at a faster pace year over year in October than in September. And travel mostly to US destinations pushed up the cost of travel tours.
Analysts said the overall pricing trend will add pressure on the Bank of Canada to hold its key lending rate at 5 per cent in the coming months and maybe even lower it.
“Canada continues to see slow and steady progress in its battle to tame excess inflationary pressures,” Desjardins analyst Royce Mends said in a research note.
“This is exactly the type of progress that central bank officials have been waiting to see. If the door wasn’t already shut to additional rate hikes, it now should be,” he said.
RBC economist Claire Fan said there are also signs of falling consumer spending and a deterioration in labor market conditions that “support our outlook for inflation to keep moderating in the quarters ahead.”
“We continue to expect the Bank of Canada is done with rate hikes, and for them to cautiously pivot to cuts over the latter half of 2024.”
