Canada's Inflation Rate Ticks Down To 1.9% in November

• Canada's annual inflation rate unexpectedly dropped by a tick to 1.9% in November, driven by a broad-based slowdown in prices, while the consumer price index was unchanged on a monthly basis. Analysts polled by Reuters had forecast that inflation would hold steady at the 2% rate recorded in October and the consumer price index would rise 0.1% month over month.
• The Canadian central bank's preferred measures of core inflation, CPI-median and CPI-trim, were unchanged, though the previous month's data were revised up by a notch. CPI-median remained at 2.6%, and CPI-trim - which excludes the most extreme price changes - stayed at 2.7%.
• Economists noted that continued strength in core measures could be an issue for the Bank of Canada, which has said that with inflation coming down consistently, it was important for the bank to ease rates to prop up the economy.
• "While the Bank of Canada will welcome the renewed dip below 2% for headline inflation, they would prefer that the sticky core trends stayed away this holiday season," said Douglas Porter, chief economist at BMO Capital Markets. The bank has forecast core inflation to average at 2.3% for the fourth quarter but it is currently trending around 2.7% roughly. Tuesday's data was the first of two inflation reports the BoC will get to assess before its next rate decision on Jan. 29.
• The central bank has cut interest rates by 50 basis points at each of its last two policy announcements to bring the cumulative reduction in borrowing costs to 175 basis points since June. This has helped restrict the rise in consumer prices to the mid-point of its desired target range of 1-3% for several months. BoC Governor Tiff Macklem indicated last week that further rate cuts would be more gradual.

(Source: Reuters)