Canada's Annual Inflation Rate Rises to 2% in October

• Canada's annual inflation rate accelerated more than expected to 2.0% in October as gas prices fell less than the previous month, data showed on Tuesday, likely diluting chances of another large rate cut in December.
• Prices for goods rose 0.1% on a year-over-year basis in October, following a 1.0% decline in September. In contrast, prices for services decelerated in October, rising 3.6%, the smallest yearly increase since January 2022. Over the past three years, prices for goods rose 10.2%, while prices for services increased 14.2%.
• Karl Schamotta, Chief Market Strategist at Corpay, believes the Bank of Canada will likely opt for a smaller quarter-point increase in December. He expects signs of economic resilience to support policy expectations into 2025. However, underlying price pressures are continuing to ease. If the upcoming GDP release on November 29 and the jobs report on December 6 show softer results than today's report, policymakers may take more aggressive action to reduce the gap between current rates and the neutral rate^[1]. This gap is estimated to be between 2.75% and 3.25%.

Source: (Reuters & Statistics Canada)