Canada's Inflation Steady In November, With Signs Of Cooling In Underlying Measures, Says TD

09:58 AM EST, 12/15/2025 (MT Newswires) -- Canadian headline consumer price index inflation for November came in at 2.2% year over year, matching October's pace and broadly in line with expectations, said TD after Monday's data.

However, inflation at the grocery store heated up in November, with prices up 4.7% year over year, up from 3.4% in October and the fastest pace of increase in nearly two years. November's acceleration was driven by fresh fruit prices (+4.4% year over year), while beef (+17.7% year over year) and coffee (27.8% year over year) prices continued to be big contributors to grocery inflation.

There was some offset from prices at the pump, which are still down 7.8% from a year ago in November, but were up on the month. Overall goods prices are up 1.5% year over year, but durable goods prices are up a hotter 2.7% year over year. Durable goods inflation has picked up this year, after being in deflation in 2024.

Service inflation took a step down in November to 2.8% year over year versus 3.2% in October, driven by lower prices for travel tours (8.2% year over year). Traveler accommodation was also down 6.9% year over year, benefiting from a comparison to elevated hotel prices a year ago due to the Taylor Swift concert in Toronto. But it wasn't all special factors, rent inflation also slowed to 4.7% year over year from 5.2% in October amid broad-based slower rent growth across regions.

The Bank of Canada has focused on broader "underlying inflation" recently, but looking at its official core inflation metrics (median and trim), both cooled below 3% for the first time since March, running at 2.8% year over year in November. Zeroing in on trends over the past three months, core inflation is running closer to the BoC's 2% target, with trim and median inflation running at 2.4% and 2.2%, respectively, on a three-month annualized basis.

November's inflation report underscored why the BoC hasn't seemed overly worried about inflation trends in recent months, stated TD. Underlying inflation is still above the 2% target, but it's getting a lot closer in recent months.

Looking ahead, Canadian inflation is likely to see some "choppiness," according to the bank. December's inflation will be boosted by comparisons with last year's GST holiday.

However, overall, TD expects inflation to moderate to the BoC's target over the next year, as past inflation problem areas, like rents, continue to cool.

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