OTTAWA -- Canada's inflation rate rose last month for the first time since July, climbing two-tenths of a point to 0.9 per cent as a trend toward lower gasoline and energy prices appeared to hit bottom.
Statistics Canada still noted, however, that consumer price pressures throughout the country remain well in hand, with only modest increases on the major goods and services that Canadians regularly depend on -- such as food, energy and shelter.
In fact, November was the seventh month in the past 13 where the official headline inflation reading came in below the Bank of Canada's desired broad range of between one and three per cent, and the 19th consecutive month it has been below the ideal target of two per cent. It was also lower than the one per cent economists had expected.
Coupled with a weak retail number, also released Friday by Statistics Canada, the two economic reports suggest the Canadian economy continues to experience weak growth, said analysts.
Markets sold down the loonie by 0.44 of a cent to 93.32 US shortly after release of the reports, which came out at the same time that the U.S. was announcing a revision to its third quarter growth performance to 4.1 per cent, the strongest in two years. By contrast, Canada's GDP advanced by 2.7 per cent in the same period.
"I think it was a combination of a couple of soggy Canadian numbers and a rip-roaring U.S. number. Actually I'm surprised the dollar didn't fall further," said Doug Porter, chief economist with the Bank of Montreal.
"A sliding dollar will eventually lift price pressures somewhat," he added, "but the bank will remain on alert unless and until growth picks up some steam."
Canada's central bank cited persistently low inflation for its decision in October to drop a longstanding bias in favour of tightening money supply, signalling that it likely intends to keep interest rates at super low levels well into 2015.
The central bank judges that the minimal pressure on prices for consumer goods and services is a sign that Canada's economy continues to have plenty of slack and will need another two years or so to return to full production capacity.
There was nothing in Friday's inflation report from Statistics Canada that would suggest the bank's analysis is off the mark.
But Jimmy Jean, an analyst with Desjardins Capital Markets, doubted that the softness is enough to convince the Bank of Canada governor Stephen Poloz to reverse course on interest rates completely. The bank has said for over three years that at one per cent, it's policy setting is the appropriate and sufficient stimulus to keep the economy afloat.
"We recognize that inflation remains weak and will likely sustain Bank of Canada dovish rhetoric," Jean said. "We do not believe that rate cuts are a serious consideration, however."
On a month-month basis, prices were flat in November and the central bank's core inflation index edged down one-tenth to 1.1 per cent -- the 17th consecutive month it has been below target.
Gasoline and energy prices were stronger than they were in October on a year-year basis, but only rose 0.4 per cent and 2.3 per cent respectively, with the broader energy component influenced by a 5.1 increase in electricity and a 5.3 per cent gain in natural gas. Still, the increases come off of declines the previous month.
In general, six of the major price components tracked by Statistics Canada increased in November, although all the gains were moderate.
Food prices were only 1.1 per cent higher, while shelter costs rose by 1.8 per cent on increases for electricity and natural gas, as well as a 1.7 per cent bump on rents. Alcohol and tobacco products rose by two per cent.
Meanwhile, clothing and footwear prices declined slightly, as did costs for health and personal care, and mortgage costs fell by 2.1 per cent.
Among the biggest price increase in November was for fresh vegetables, which rose more than 12 per cent both over the year and on a month-to-month basis.
Regionally, inflation was strongest at 2.6 per cent in Prince Edward Island and weakest in British Columbia, where prices declined by 0.2 per cent.
Here's what happened in the provinces and territories. (Previous month in brackets):
- Newfoundland and Labrador 2.2 (1.5)
- Prince Edward Island 2.6 (2.0)
- Nova Scotia 1.0 (0.9)
- New Brunswick 1.2 (0.8)
- Quebec 0.6 (0.2)
- Ontario 1.1 (0.9)
- Manitoba 2.4 (2.2)
- Saskatchewan 1.4 (1.5)
- Alberta 1.7 (1.0)
- British Columbia -0.2 (-0.3)
- Whitehorse, Yukon 1.2 (1.6)
- -- Yellowknife, N.W.T., 1.4 (1.6)
- -- Iqaluit, Nunavut 0.7 (1.7)