Statistics Canada says annual inflation rate slowed to 3.1% in October

The inflation rate slowed to 3.1% on a year-over-year basis, down from 3.8% in September, as the price of gasoline fell, Statistics Canada said Tuesday.

The agency said the price drivers paid for gasoline in October fell 7.8% from a year earlier compared with a 7.5% increase in September, driven partly by a spike in gasoline prices in October 2022 after OPEC announced production cuts.

Excluding gasoline, Statistics Canada says the consumer price index was up 3.6% for October, following a 3.7% increase for September.

Prices for goods were up 1.6%, while prices for services were up 4.6%, largely due to higher prices for travel tours, rent and property taxes, and other special charges.

Bank of Montreal chief economist Douglas Porter said the inflation report drives home the point that there is no need for further rate hikes by the Bank of Canada, especially with the economy already struggling to grow at all and underlying inflation calming.

“However, before the bank can even begin seriously considering rate relief, we’ll need to see more evidence that services inflation is also moderating — that could be at least another six months down the road,” Porter wrote in a note to clients.

Statistics Canada said the largest contributors to inflation continued to be mortgage interest costs, food purchased from stores and rent.

Mortgage interest costs were up 30.5% compared with a year ago, while the cost of rent was up 8.2%.

While grocery prices rose faster than overall inflation, Statistics Canada said the pace continued to slow. Grocery prices were up 5.4% year-over-year in October compared with a 5.8% move higher in September.

The inflation report came ahead of the federal government’s fall economic update expected this afternoon.

The decline in inflation should be welcome news for the Bank of Canada as it looks for evidence of a sustained slowdown in consumer price growth.

The central bank opted to hold its key interest rate steady at 5% at its last rate decision, but it has said it is prepared to raise rates again if needed to bring inflation under control.

Bank of Canada governor Tiff Macklem is scheduled to give a speech on Wednesday to the Saint John Region Chamber of Commerce on the high cost of inflation, while the central bank’s final interest rate decision for the year is set for Dec. 6.