OTTAWA- Canada’s annual inflation rate unexpectedly accelerated to 0.7 percent in October, up from a year-over-year increase of 0.5 percent in September, mainly on higher food prices, Statistics Canada said on Wednesday.
The result beat analysts’ estimates of an annual 0.4 percent increase in October. Excluding gasoline, prices rose 1.0 percent in October from a year earlier, matching September.
“The headline data was a bit firmer than expected. But the way the market’s trading the data these days, it’s a bit more attuned to downside misses than upside surprises,” said Bipan Rai, North America head of FX strategy at CIBC Capital Markets.
The Canadian dollar gave back some of its earlier gains after the data, trading up 0.1 percent at 1.3089 to the greenback, or 76.40 US cents.
Headline inflation remains less than half of what it was before the coronavirus pandemic and well below the Bank of Canada’s 2 percent target, economists noted. Still, two of the three core measures the central bank uses increased.
The common measure, which the Bank says is the best gauge of the economy’s underperformance, gained slightly to 1.6 percent from 1.5 percent in September. The CPI trim measure also increased to 1.8 percent from 1.7 percent, and the median remained at 1.9 percent.
“The Bank of Canada has told us they’re not going to hike rates until inflation gets sustainably above their target, and we’re still below their target,” said Doug Porter, chief economists at BMO Capital Markets.