Canada's Inflation Eases Amid Lower Gasoline Prices and Mortgage Costs

Canada's annual inflation rate in October eased to 2.2% amid falling gasoline prices and mortgage costs. Gasoline prices was the main contributor to the decrease in inflation.. Analysts had predicted a drop to 2.1%. Stable inflation is cited by the Bank of Canada in its decision to halt rate cuts.

Canada's annual inflation rate eased to 2.2% in October, primarily due to a sharp decrease in gasoline prices, easing food prices, and a dip in mortgage interest costs, according to data released on Monday. Notably, the removal of the carbon levy on gasoline has helped keep inflation in check over recent months, though the annual consumer price index still rose by 2.7% when excluding this effect, as reported by Statistics Canada.

Despite a forecasted rate of 2.1% by analysts for October, inflation's reduction provides room for the Bank of Canada to consider its position on interest rates. The bank previously halted rate cuts, citing stable inflation as a decisive factor, and the ongoing moderation may strengthen its stance on maintaining the current policy rate of 2.25%.

A considerable drop in gasoline prices—down 9.4% in October compared to a 4.1% decline in September—is credited to cheaper winter blends and lower crude oil prices due to oversupply concerns. Additionally, the slower rise in food prices contributed to the easing. However, rent inflation rose above 5%, showcasing volatility in different price sectors, with core measures like CPI-median and CPI-trim showing slight decreases.

(With inputs from agencies.)