By Erik Hertzberg
(Bloomberg) — Inflation in Canada cooled less than expected last month, supporting the Bank of Canada’s decision to move to the sidelines after back-to-back rate cuts.
Headline inflation decelerated to 2.2% in October, Statistics Canada data showed Monday, driven by a faster yearly decrease in gasoline costs.
That’s above the median projection in a Bloomberg survey of economists, who were expecting yearly price pressures to slow to a 2.1% yearly clip, from 2.4% in September.
On a monthly basis, the consumer price index rose by 0.2%, matching expectations.
The report showed conflicting signals for core inflation. The Bank of Canada’s trim and median gauges decelerated to a 2.95% yearly clip, from 3.1% previously. On a three-month moving annualized basis, those measures slowed to 2.6%, from 2.7% in September.
The breadth of inflationary pressures also narrowed, with about 34% of items in the consumer price index rising above a 3% yearly pace, from 38% previously.
But excluding food and energy, prices rose 2.7% from a year earlier, up from 2.4% in September. The bank’s previous measure of core inflation — CPI excluding eight volatile components and indirect taxes — also accelerated to 2.9%.
Combined, the report shows headline inflation trending back toward the central bank’s 2% target, but core measures are sticking in the top part of policy-makers’ control band for price pressures.
Officials led by Governor Tiff Macklem cut interest rates to 2.25% last month as the economy continues to take damage from the trade war, but signaled reluctance to ease borrowing costs further, saying their ability to help the economy was limited by the potential for higher inflation stemming from the trade dispute.
Policy-makers said rates were at “about the right level” as long as the economy and inflation evolved in line with their expectations.
Shelter prices were a major contributor to monthly price pressures, rising 0.6% and driven by rental costs and insurance. On a yearly basis, shelter is up 2.5% from a year earlier.
Food prices fell 0.3% on the month, but are up 3.4% on the year.
In recent months, the bank warned that markets may be putting too much emphasis on its two “preferred” core inflation measures, the so-called trim and median gauges.
–With assistance from Mario Baker Ramirez.
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Last modified: November 17, 2025