We're still a long way before an easing cycle will commence: Economist
Canadians are continuing to feel pressure at the pumps after gasoline prices increased by almost 10 per cent in October, according to Statistics Canada.
As part of its monthly Consumer Price Index (CPI) report, it said fuel prices increased 9.2 per cent on a monthly basis in October, after a decrease of 7.4 per cent in September.
Overall Canadian inflation remained steady in October, with Statistics Canada reporting the CPI rose 6.9 per cent in compared to a year ago, which was in line with economists’ expectations.
On a monthly basis, inflation increased 0.7 per cent in October from September, which was mainly driven by elevated gasoline prices.
Core CPI, which excludes gas and food prices, rose 5.3 per cent on an annual basis. That compares with a 5.4-per-cent climb in September.
“Higher gasoline prices in October were a key culprit keeping inflation elevated,” said Leslie Preston, senior economist and managing director at TD Bank, in a note to clients Wednesday.
Statistics Canada said there were two main factors that contributed to Canadians paying higher prices at the pump in October: “The announcement of future oil production cuts by the Organization of the Petroleum Exporting Countries Plus and a weaker Canadian dollar contributed to higher gasoline prices for Canadian consumers.”
But the overall steady inflation figure is not the worst possible outcome, according to Douglas Porter, chief economist and managing director at the Bank of Montreal.
“We'll call this one a tie, as it matched consensus and held the annual inflation rate steady at just below seven per cent,” Porter said in a note to clients on Wednesday.
“Given the big run-up in gasoline prices, that's not a terrible outcome.”
While elevated energy prices continue to be a driving factor in Canada’s inflation rate, some economists think these issues could ease in 2023.
“Energy prices are for now still a hot spot in the CPI, up 16.2 per cent in the past year, but as we move into 2023, as long as world crude prices stay range bound, that source of inflation will melt away quite dramatically,” Avery Shenfeld, chief economist at CIBC Capital Markets, said in a note to clients on Wednesday.