EconoFACTS

November 17, 2025 | 09:17

Cdn CPI — Don't Call Me on My Cell Phone

Economist

Chief Economist and Managing Director
Economics

Douglas Porter has over 30 years of experience analyzing global economies and financial markets. As Chief Econom... (Read more)

Douglas Porter , CFA

Chief Economist and Managing Director
Economics

Douglas Porter has over 30 years of experience analyzing global economies and financial markets. As Chief Econom... (Read more)

Canadian consumer prices rose 0.2% in October (or just 0.1% in s.a. terms), cool enough to clip the headline inflation rate two ticks to 2.2%. However, the details were a tad on the disappointing side as lower gasoline and food prices were a big reason for the moderation, while many underlying prices ticked up. For example, the old measure of core—prices excluding food & energy—rose 0.3% m/m on an adjusted basis, boosting the yearly rate three full ticks to 2.7% y/y. A pop in cellular services was a big driver there; in fact, the 7.9% y/y rise in all telephone services was the largest yearly rise since 1982. Still, a pullback in grocery prices, perhaps in part courtesy of the rollback in retaliatory tariffs, helped moderate the Bank of Canada's core measures. Median prices edged up just 0.1% m/m (s.a.), trimming the annual rate to 2.9%, while trim eased a tick to 3.0% y/y.

The primary factor behind the dip in headline inflation was a 4.8% m/m drop in gasoline prices, which cut them 9.4% from a year ago. A 0.6% m/m pullback in grocery prices helped; while food costs often dip in October, this one was larger than normal, shaving the yearly rise to 3.4% (from 4.0%). On the flip side, rent perked up again to 5.2% y/y (from 4.8%), and remains the single biggest driver of inflation due to its heavy weight in the index. Also keeping a burner on underlying inflation, besides cell phone charges, were insurance costs. Home insurance spiked to 6.8% y/y, rising back close to the average increase of 7.5% in each of the past three years—now that's inflation. Vehicle insurance is rising even more quickly at 7.3% y/y (after an 8.1% rise last year). Finally, October is the month that annual property tax increases are captured, and this year saw another meaty 5.6% rise, on top of last year's 30-year high of 6.0%.

Bottom Line: On the surface, this looks to be a mildly friendly report with headline and median inflation rates dipping. However, the sources of relief were well-known ahead of time, and the new news here is not great, driven by persistent strength in insurance costs and a snap higher in cell charges. Overall, this does little to change the BoC's view that underlying inflation remains close to 2-1/2%; but, if anything, most underlying metrics have been stuck a bit above that, or have just crept up there. In other words, this report is just another reason to believe the Bank is moving to the sidelines in December.

Table 1 - Canada — CPI

(month/month % change)

Source: BMO Economics, Haver Analytics