Canada's inflation rate in October rose higher than expected. The market is predicting a 60% probability of a 25 basis point rate cut in December.

According to data released by Statistics Canada on Tuesday, the annual inflation rate in Canada for October rose to 2%, partly due to base effects of gasoline prices. In comparison, the Consumer Price Index (CPI) in September increased at an annual rate of 1.6%. The core inflation indicator closely watched by the Bank of Canada also slightly accelerated in October, with the median value of CPI rising from 2.1% in September to 2.2%. CIBC economist Katherine Judge stated after the report on Tuesday, "Given a series of relatively good inflation reports prior to this, and with the need to observe GDP and employment data before the December central bank decision, we still think a 50 basis point rate cut is possible at the next meeting." Currently, the probability of at least a 25 basis point rate cut in December is estimated at around 60% in the currency market. The Bank of Canada is scheduled to announce its latest interest rate decision on December 11th. Last month, Bank of Canada Governor Tiff Macklem stated, "Canadians can breathe a sigh of relief knowing that the cost of living will not change significantly." According to data from LSEG Data & Analytics, economists surveyed by foreign media previously expected the annual inflation rate for October to rise to 1.9%. In terms of monthly changes, CPI rose by 0.4% in October compared to the previous month, and by 0.3% after seasonal adjustments. The Statistics Canada mentioned that the price increases in October for all provinces were faster than in September. Decrease in gasoline price declines Gasoline prices decreased by 4.0% year-on-year in October, lower than the 10.7% in September. The Federal Statistical Office explained, "The decrease is partly due to base effects, as gasoline prices decreased by 6.4% month-on-month in October 2023, mainly due to declining refining profit margins and weak global oil consumption." Food prices increase faster than overall prices Data shows that supermarket food prices increased faster year-on-year in October, rising from 2.4% in September to 2.7%. Fresh vegetable prices accelerated in growth, while the increase in frozen beef prices slowed down. The Statistics Canada stated, "This is the third consecutive month that grocery prices have increased more than the overall inflation rate." Rent prices remain high Despite a slowdown in growth, rent prices increased by 7.3% year-on-year in October, lower than the 8.2% in September. The provinces with the smallest rent increase were Nova Scotia and Manitoba. "Despite the slowdown in growth, rent prices remain high," noted the Statistics Canada. "Compared to October 2021, rent prices increased by 21.6%." Data shows that since September 2023, the year-on-year growth rate of mortgage interest has begun to slow down, after reaching a peak in August. The overall housing category (including items such as rent and home repairs) saw a decrease in the year-on-year growth rate from 5% in September to 4.8% in October.