Statistics Canada building and signs are pictured in Ottawa on Wednesday, July 3, 2019. THE CANADIAN PRESS/Sean Kilpatrick

Rising food prices push annual rate of inflation 0.7 per cent higher in October

Rising food prices push annual rate of inflation 0.7 per cent higher in October

OTTAWA — The country’s headline inflation meter jumped last month by 0.7 per cent compared to one year ago, the fastest the consumer price index has risen in months, largely on the back of higher food prices.

October’s increase compared with a year-over-year rise of 0.5 per cent in September.

The increase was almost entirely driven by rising food prices, particularly lettuce and fresh or frozen chicken, Statistics Canada said Wednesday.

The 25.6 per cent annualized increase in the former was largely a result of supply issues. The 2.4 per cent growth in the latter had more to do with uncertainty in the food services industry, which continues to feel the brunt of the COVID-19 pandemic.

Natural gas prices rose by 11.6 per cent in October compared with the same month in 2019, driven mostly by a 12.5 per cent bump in Ontario.

Regionally, prices for cigarettes rose 14.9 per cent year-over-year in Newfoundland and Labrador, the largest increase since June 2003, on the back of a tax increase that kicked in Oct. 1.

The overall jump in October was the sharpest increase since June amid an eight-month spell where monthly readings have been under one per cent, held down by the change in shopping habits due to COVID-19.

Things aren’t expected to get much better, even as retailers hope to entice shoppers into an earlier start to the Christmas shopping season.

BMO chief economist Douglas Porter said there will be a tug of war on prices as businesses balance increasing costs from public health measures while battling depressed demand.

Some sectors may see big price increases for hot items such as equipment for a home gym or outdoor furniture, but Porter said it won’t be enough to drive up overall inflation.

“We’ve got a real push-and-pull on the inflation front,” he said.

“We tend to believe that what is dominating and what will dominate overall is the underlying weakness in the economy and that will tend to keep a lid on overall inflation.”

Statistics Canada noted gas prices were down 12.4 per cent in October compared to one year earlier. Excluding the drop from calculations, the headline inflation reading would have increased on a year-over-year basis of one per cent.

Statistics Canada said new home prices increased in October at their fastest pace in 14 years, as lower mortgage rates coincided with increased demand for single-family homes.

“While lower interest rates are reducing mortgage service costs, this is being overwhelmed by higher costs for new housing,” James Marple, a senior economist with TD Economics, wrote in a note.

Mortgage rates have been driven down by the Bank of Canada’s key policy rate — currently at 0.25 per cent — which is as low as the central bank says it can go. It says the rate will stay there until inflation is back at two per cent.

In October, the average of Canada’s three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was about 1.8 per cent.

CIBC senior economist Royce Mendes said the core inflation readings suggest the relationship between consumer prices and the overall economy may be weaker than in the past.

That may force the central bank to leave stimulus in the economy for a little longer to help coax inflation back up to its comfort zone of two per cent, he wrote in a note.

The central bank forecasted last month that annual inflation would be 0.6 per cent this year, one per cent next year, and 1.7 per cent in 2022. The earliest the bank anticipates the economy would be able to handle higher rates is 2023.

This report by The Canadian Press was first published Nov. 18, 2020.

Jordan Press, The Canadian Press

inflation

Just Posted

Mayor Rick Bonnett. (Screenshot)
WATCH: Ponoka council calls on gov’t to support rural small businesses

Ponoka council is calling on the provincial government to increase funding to… Continue reading

Pumpjacks draw oil out of the ground near Olds, Alta., Thursday, July 16, 2020. A new report suggests the economic impact of the pandemic led to a massive increase in federal aid to Canada's oil patch. THE CANADIAN PRESS/Jeff McIntosh
Alberta economy ‘still reeling,’ says ATB Financial

Alberta’s economy is still feeling the impact of the COVID-19 pandemic and… Continue reading

Ella Stoner, five, is ready to cut off her hair and donate it to A Child’s Voice Foundation. (Photo by Lauren Stoner Photography)
Central Alberta girl to donate her ‘princess hair’ to A Child’s Voice Foundation

A five-year-old girl from Rimbey has never had a haircut before. Now,… Continue reading

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Alberta adds 1,195 new COVID-19 cases Saturday

Red Deer has dropped to 760 active cases

The Minnesota Wild celebrate their overtime victory over the Vegas Golden Knights in Game 1 of a first-round NHL hockey playoff series Sunday, May 16, 2021, in Las Vegas. (AP Photo/David Becker)
Eriksson Ek’s OT goal lifts Wild past Vegas 1-0

LAS VEGAS (AP) — Joel Eriksson Ek’s goal at 3:20 of overtime… Continue reading

Toronto Blue Jays' Lourdes Gurriel Jr., celebrates after hitting a double against the Philadelphia Phillies during the third inning of a baseball game Sunday, May 16, 2021, in Dunedin, Fla. (AP Photo/Mike Carlson)
Girardi, Segura have confrontation as Phils lose to Jays

Blue Jays 10 Phillies 8 DUNEDIN, Fla. (AP) — The injury-depleted Philadelphia… Continue reading

New York Islanders' Kyle Palmieri (21) returns to the bench after scoring during the first period in Game 1 of an NHL hockey Stanley Cup first-round playoff series against the Pittsburgh Penguins in Pittsburgh, Sunday, May 16, 2021. (AP Photo/Gene J. Puskar)
Palmieri’s OT winner lifts Isles by Penguins 4-3 in Game 1

PITTSBURGH (AP) — The New York Islanders brought Kyle Palmieri home at… Continue reading

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, speaks during a Senate Health, Education, Labor, and Pensions hearing to examine an update from Federal officials on efforts to combat COVID-19, Tuesday, May 11, 2021 on Capitol Hill in Washington. (Jim Lo Scalzo/Pool via AP)
Fauci says pandemic exposed ‘undeniable effects of racism’

ATLANTA (AP) — The immunologist who leads the COVID-19 response in the… Continue reading

Maj.-Gen. Dany Fortin, vice-president of logistics and operations at the Public Health Agency of Canada, participates in a news conference on the COVID-19 pandemic in Ottawa, on Friday, Jan. 15, 2021. THE CANADIAN PRESS/Justin Tang
Feds face growing calls for answers after general overseeing vaccine effort sidelined

OTTAWA — The federal Liberal government is facing growing calls for answers… Continue reading

Conservative MP Ron Liepert rises during Question Period on Parliament Hill, Friday, March 10, 2017 in Ottawa. Ron Liepert says these days, the phone calls and emails from people wanting to talk about his party's climate plan have slowed. THE CANADIAN PRESS/Justin Tang
Alberta MP pitches Conservative carbon price with a 24-pack of Pilsner

OTTAWA — Ron Liepert says these days, the phone calls and emails… Continue reading

A sign marks Stairs Place in the Hydrostone district in the North end of Halifax on Thursday, May 13, 2021. The street was named for William Grant Stairs, a Canadian explorer from Halifax who helped lead some of the most controversial expeditions through the African continent. THE CANADIAN PRESS/Andrew Vaughan
Where the streets have explorers’ names, some Halifax residents call for change

HALIFAX — When builders created Halifax’s distinctive Hydrostone neighbourhood more than a… Continue reading

Riley Oldford, 16, suffers from cerebral palsy. He was the first youth in the Northwest Territories to get a COVID-19 vaccine. Here he receives the needle from nurse practitioner Janie Neudorf in Yellowknife on Thursday May 6, 2021. THE CANADIAN PRESS/Bill Braden
People with disabilities even more alone during pandemic: cerebral palsy spokeswoman

YELLOWKNIFE — Riley Oldford is usually out playing sledge hockey or hanging… Continue reading

Most Read