Annual inflation holds steady at 2.9 per cent in November

OTTAWA—Canada’s annual inflation rate remained relatively strong at 2.9 per cent last month as Canadians continued to pay considerably more for food and gasoline than they had 12 months earlier.

Statistics Canada said food rose sharply by 4.8 per cent in November from last year, as consumers saw double-digit increases for such basics as fresh vegetables and bread, while meat rose a healthy 6.2 per cent.

The monthly overall gain in food was the highest recorded since July 2009, the agency said.

Meanwhile, gasoline also continued to be a key driver of annual inflation, rising 13.5 per cent in November from 12 months earlier.

Gasoline price inflation is on a downward track after peaking in May at close to 30 per cent. On a month-to-month basis, Canadians actually paid 2.3 per cent less for gas in last month than they did in October.

The continuing high cost of gasoline helped push the transportation component up 5.7 per cent, although that was less than the 6.7 per cent gain recorded in October.

Overall, Statistics Canada said that prices rose in all eight major components it tracks and in every province in Canada, with the highest rate — 4.1 per cent — recorded in Newfoundland and Labrador.

Still, the Bank of Canada has repeatedly stressed that it is not worried about inflation even though it has remained above the bank’s two per cent target for more than a year. The bank’s core inflation index, which tracks underlying price pressures by excluding volatile items such as energy and some foods, was also north of target at 2.1 per cent in November.

But in its most recent report on the state of the economy, the central bank said it expects overall inflation to decline to one per cent by mid-2012 as gas continues to decline. There’s little in November’s report that will likely to detract from that sentiment.

Aside from food and energy, most price increases in November were tame. Shelter costs rose 1.5 per cent, although fuel oil, which is related to the energy component, was still 24.4 per cent higher than 12 months ago. Consumers also paid 4.4 per cent more for car insurance.

However, home mortgage and interest costs fell 1.1 per cent, natural gas declined 2.7 per cent, video equipment dropped 12.4 per cent, women’s clothing slimmed by 2.1 per cent and furniture cost 2.1 per cent less.

On a month-to-month basis, inflation was a tepid 0.1 per cent in November from October, the agency said.