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Special Report

Canada Inflation Research Brief

November 2023

Inflation Takes a Significant Step Toward
Bank of Canada’s Target Range

Economy continues to show signs of cooling. Canada’s headline inflation rate hit 3.1 per cent in October, down from the 3.8 per cent reading in September and just slightly above the Bank of Canada’s target range of 1.0 to 3.0 per cent. Given favourable base-year effects, this drop was mainly driven by a 7.8 per cent fall in gasoline prices. Additionally, the Central Bank’s preferred measures of core inflation — CPI-median and CPI-trim — reached their lowest levels since the end of 2021, sitting at 3.6 and 3.5 per cent, respectively. This brought the three-month annualized change to 3.0 per cent. Price pressures remained sticky for service inflation, however, which accelerated to an annual pace of 4.6 per cent, and was largely fueled by an 8.2 per cent jump in rental costs, as well as surging mortgage interest costs. Despite this, October’s inflation measure was broadly welcomed, further supporting the belief that the Bank of Canada is done with its interest rate hiking cycle. 

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