The country’s annual inflation rate rose to 1% in November, driven by a rise in prices for homes, rent and goods around the house.<\/p>\n

Statistics Canada said Wednesday the increase compared with a year-over-year increase of 0.7% in October and 0.5% in September.<\/p>\n

Economists had expected a year-over-year increase for November of 0.8%, according to financial data firm Refinitiv.<\/p>\n

Shelter prices rose 1.9%, contributing the most to the overall increase. Rent prices rose 1.5% in November compared to one year earlier, an increase from the 1% recorded in October.<\/p>\n

Prices for furniture were up 2.8%, and appliances by 2.9%, remaining above pre-pandemic levels.<\/p>\n

Statistics Canada said the focus on spending around houses is likely due to the pandemic itself: physical distancing rules and workers asked to stay home “may have prompted increased spending on big-ticket items.”<\/p>\n

Also driving the increase is a collision of pent-up demand, a glut of savings, historically low interest rates and homebuyers interested in more single-family homes than condominiums.<\/p>\n

Throw into the mix higher building material costs and low inventories, and Statistics Canada said there is a perfect mixture for rising prices for new housing.<\/p>\n

Mortgage rates have been driven down by the Bank of Canada’s key policy rate \u2014 currently at 0.25% \u2014 which is as low as the central bank says it can go.<\/p>\n

The Bank of Canada has said the rate will stay there until inflation is back at 2%, which the central bank said last week it doesn’t expect to happen until some time in 2023.<\/p>\n

“I have no doubt that that is a factor supporting the housing market,” Bank of Canada governor Tiff Macklem said Tuesday when asked by a reporter about the housing market.<\/p>\n

“Frankly, that’s part of the way monetary policy works. That’s part of the way it puts stimulus in the system by encouraging spending particularly on things that are often bought with credit.”<\/p>\n

In November, the average of Canada’s three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was about 1.7%.<\/p>\n

Gasoline prices in November fell 11.9% year over year as the pandemic continued to weigh on demand.<\/p>\n

Statistics Canada says the consumer price index excluding gasoline in November was up 1.3% compared with a year ago.<\/p>\n

Rising gasoline prices expected next year will likely push headline inflation above the central bank’s 2% target next year, but the overshoot could be temporary, says CIBC senior economist Royce Mendes.<\/p>\n

He wrote in a note that the Bank of Canada will likely look through it and leave the policy rate on hold until slack in the economy is absorbed.<\/p>\n","protected":false},"excerpt":{"rendered":"

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