Statistics Canada said Tuesday that grocery prices were up 5.7 per cent in November compared with a year ago as consumers saw double-digit increases for such basics as fresh vegetables and bread. The figures included a 1.3 per cent jump from October alone.
Overall food prices, including restaurant meals, were 4.8 per cent higher than a year earlier, the biggest such increase since July 2009, the federal agency said.
Meanwhile, gasoline also continued to be a key driver of annual inflation, rising 13.5 per cent in November from 12 months earlier.
However, gasoline price inflation is on a downward track after peaking in May at close to 30 per cent. On a month-to-month basis, Canadians actually paid 2.3 per cent less for gas in November than they did in October.
The continuing high cost of gasoline helped push the transportation component up 5.7 per cent, although that was less than the 6.7 per cent gain recorded in October.
Overall, Statistics Canada said prices rose in all eight major components it tracks and in every province in Canada, with the highest rate — 4.1 per cent — recorded in Newfoundland and Labrador.
Still, the Bank of Canada has repeatedly stressed that it is not worried about inflation even though it has remained above the bank's 2 per cent target for more than a year.
The bank's core inflation index, which tracks underlying price pressures by excluding volatile items such as energy and some foods, was also north of target at 2.1 per cent in November.
But in its most recent report on the state of the economy, the central bank said it expects overall inflation to decline to 1 per cent by mid-2012 as gasoline prices continue to decline. There's little in November's report that will likely to detract from that sentiment.
“The Bank of Canada can seek a little more comfort in this inflation report than the general tendency to surprise to the upside over the prior couple of reports,” said Scotiabank economist Derek Holt.
But he quibbled with the central bank's sharply falling inflation scenario.
“They could well be proven right, but it's somewhat unusual for a central bank to have one of the most aggressive forecasts on the street. In order for the bank's view to come to fruition, we need much, much softer global growth ... (and) a more significant commodity shock.”
The Bank of Montreal's Douglas Porter pointed out that with a month of data remaining, it looks like inflation in Canada will average about three per cent this year. But that's still the highest rate over a full year in two decades, he said.
Scotiabank and TD Bank economists said a more realistic trough for inflation in mid-2012 is 1.6 or 1.7 per cent.
Economists generally agree with the Bank of Canada that inflation will continue to moderate over the next few months as a result of lower demand for commodities, including oil, and the continuing excess capacity in the economy, which will make it difficult for businesses to demand higher prices for their goods.
Aside from food and energy, most price increases in November were tame. Shelter costs rose 1.5 per cent, although fuel oil, which is related to the energy component, was still 24.4 per cent higher than 12 months ago. Consumers also paid 4.4 per cent more for car insurance and 3.3 per cent more for new model cars, although that is down from the 4 per cent price hike of last November and a 5 per cent increase in 2009.
However, home mortgage and interest costs fell 1.1 per cent, natural gas declined 2.7 per cent, video equipment dropped 12.4 per cent, women's clothing slimmed by 2.1 per cent and furniture cost 2.1 per cent less.
On a month-to-month basis, inflation was a tepid 0.1 per cent in November from October, the agency said.
Origin
Source: Globe
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