Canada’s annual inflation rate edged down slightly to 6.8 per cent in November.
In its latest consumer price index report released Wednesday, Statistics Canada said slower price growth for gasoline and furniture last month was offset by rapidly rising shelter costs and stubbornly high grocery prices.
Grocery prices climbed at a faster annual rate in November. The federal agency said prices rose 11.4 per cent annually, up from 11 per cent in October.
The rise in shelter costs is attributed to higher mortgage interest costs and rising rent. Mortgage interest costs were 14.5 per cent higher in November on an annual basis, while rent was up 5.9 per cent.
Statistics Canada said upward pressure is being placed on rent prices as more Canadians are priced out of homeownership because of high interest rates.
Gasoline prices were down 3.6 per cent on a monthly basis.
Excluding food and energy, prices were up 5.4 per cent on a yearly basis.
In a client note, BMO chief economist Douglas Porter said core inflation edging up is a clear sign of persistent underlying inflation pressures.
“Turning the temperature down on inflation is proving to be an achingly slow process, and we suspect this may be a theme for 2023,” Porter said.
November’s consumer price index report compares with an annual inflation rate of 6.9 per cent in October and September. Inflation peaked in July at 8.1 per cent.
Economists expect Canadians facing higher shelter costs because of high interest rates to pull back on other spending. That process is expected to slow inflation.
The Bank of Canada has raised interest rates rapidly this year to cool decades-high inflation and slow spending in the economy.
Earlier this month, the central bank raised its key interest rate for the seventh consecutive time this year, bringing it to 4.25 per cent.
It also signalled it’s open to pressing pause on the rate hikes, depending on how the economy evolves.
However, Porter is doubtful the Bank of Canada is ready to stop its aggressive rate hike cycle and expects it to hike rates again in January.
“This firm report does nothing to doubt that call,” he wrote.