Canada's Inflation Matches Expectations as Underlying Inflation Measures Offer Mixed Signals, Says TD

12:24 PM EST, 11/17/2025 (MT Newswires) -- Canadian headline consumer price index inflation for October came in at 2.2% year over year, right in line with expectations for a 2.2% year-over-year print -- decelerating from September's 2.4%, said TD.

Gasoline prices were the big drag on the headline, falling 9.4% compared with the 4.1% decline in September. On a monthly basis, prices tumbled 4.8%, amid the switch to cheaper winter blends and ongoing worries over a global oversupply in oil markets.

Grocery price inflation slowed in October, with prices up 3.4% year over year, down from 4.0% in September. The slight deceleration offers little relief as Statistics Canada notes that grocery prices "have exceeded overall inflation for nine consecutive months." On a monthly basis, grocery prices fell 0.6% month over month.

The Bank of Canada's various of measures of underlying inflation were a mixed bag for the month, stated TD. Both of the BoC's constructed core measures came in below expectations as the CPI-trim measure fell to 3.0% year over year versus 3.1% in September, while the CPI-median index tumbled to 2.9% year over year from 3.1% in September.

On the flip side, the older exclusionary measures showed a different picture, with both heating up for the month. The CPI excluding food and energy jumped to 2.7% year over year from 2.4% in September, and the CPI excluding the eight most volatile components and indirect taxes (CPIX) rose to 2.9% year over year from 2.8% in August.

The story was the same on the three-month seasonally adjusted (annualized) basis as the CPIX and CPI excluding food and energy jumped to 3.3% and 2.6%, respectively, while the CPI-median (+2.6% from 2.8% in September) cooled and the CPI-trim was unchanged at 2.6%.

The takeaway here is that top-line inflation came in as expected while the various underlying measures continue to hover in-and-around the target range -- with some heating up and others cooling off, it pointed out.

The BoC delivered a cut at its past meeting and signaled there wasn't much more it could do in the current economic environment -- a view TD has shared for some time. This month's report doesn't change the story much as inflation is unlikely to fall below the lower end of the target range, given the disruptions on the supply side of the economy, but it is also unlikely to sharply accelerate amid expectations for tepid domestic demand.

Markets remain on the same page, putting the odds of a cut by next April at roughly 30%, according to the bank.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.