Canadian households are still grappling with inflation, albeit at a less intense rate, according to data from Statistics Canada (Stat Can). The Consumer Price Index (CPI) showed a slowdown in headline inflation in October, largely due to a decrease in gasoline prices. However, costs for groceries and shelter continue to rise significantly, with rents increasing at the fastest rate in over 40 years.
The annual growth of headline inflation dropped to 3.1% in October, a decrease of 0.7 points from the previous month. This decline is almost entirely attributed to falling gas prices, which dropped by 7.8%. Excluding gasoline prices, the CPI rose by 3.6%, just 0.1 points slower than the previous month.
Despite the overall slowdown in inflation, grocery price inflation remains high at 5.4% in October, nearly triple the Bank of Canada’s inflation target. However, this does represent a slight decrease of 0.4 points from September.
Shelter costs also remain high, with annual growth slowing slightly to 6% in October. Costs for owned accommodations saw a slight increase, rising 0.4 points to 6.7% over the same period. This trend was driven by mortgage interest, which increased by 30.6%, albeit at a slower pace than in September.
Rental costs, in particular, have seen a significant increase. Rental inflation rose 1.2 points to 8.2% in October, marking the highest growth in the past 40 years. This trend is likely to continue due to the Federal government’s financial support for rental inefficiencies.
While the inflation picture appears to be improving on paper, the real-world impact of these changes is still up for debate. However, the deceleration of inflation could potentially be good news for real estate investors.
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