Ottawa’s annual rate of inflation rose slightly above the national average in October, up two per cent over last year’s figures, according to results released by Statistics Canada on Wednesday.
Across Canada, the annual pace of inflation held steady for the third month in a row in as the consumer price index rose 1.9 per cent compared with a year ago. The result was also in line with the expectations of economists, according to financial markets data firm Refinitiv, and just shy of the Bank of Canada's target of two per cent.
Royce Mendes, senior economist for CIBC Capital Markets, said inflation has been remarkably stable for a number of months.
"If there's one thing that isn't keeping governor (Stephen) Poloz up at night, it's inflation, which again came in on both the headline and core measures almost bang on the Bank of Canada's two per cent target," Mendes wrote in a report.
He said the Bank of Canada's success in hitting its inflation target is one reason why the central bank hasn't been as eager cut its key interest rate like other central banks around the world have done.
"But, if growth numbers continue to disappoint, there could still be a Canadian rate cut coming in the new year," Mendes said.
The overall rise in prices came as food prices rose 3.7 per cent compared with a year ago. Fresh fruit prices rose 7.9 per cent and fresh vegetable prices climbed 7.5 per cent.
However, compared with a year ago, the price of gasoline was down 6.7 per cent in October compared with a 10.0 per cent decline in September.
Statistics Canada said although global demand for oil remained low in October, there were slight price increases on a monthly basis due to temporary supply disruptions in the Middle East and a drop in crude oil inventories in the United States.
Excluding gasoline, the annual pace of inflation was 2.3 per cent in October, down from 2.4 per cent in September.
Regionally, prices were up 2.3 per cent compared with a year ago in Quebec, while Manitoba and B.C. both saw increases of 2.2 per cent. The annual pace of inflation was 1.7 per cent in Ontario.
The average of Canada's three measures for core inflation, which are considered better gauges of underlying price pressures, was 2.07 per cent compared with a revised figure of 2.03 per cent in September.
The core readings are closely monitored by the Bank of Canada, which adjusts its key interest rate target to manage inflation.
Josh Nye, a senior economist at Royal Bank, said given strong wage growth in recent months, he'll be watching to see if the core measures rise further in 2020.
"But with inflation expectations looking well anchored, the scope for stronger underlying inflation looks fairly limited," Nye said.
The Bank of Canada kept its key interest rate on hold at 1.75 per cent last month. The central bank said at the time that inflation was on target and the domestic economy has held up, but it was keeping a watchful on global growth.
In making its decision, the bank said lowering rates could provide some insurance against the downside risks for the economy, but that it wasn't worth the cost at the time.
Nye said he expects monetary policy will be dependent on the growth outlook and trade risks.
"We think below-trend growth over the second half of this year will leave the door open to a rate cut in early-2020," he said.