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Canada’s main gauge of cost pressures eased in November, suggesting the Bank of Canada’s relentless campaign of interest-rate increases is starting to bite, thus opening the door for policymakers to pause in the new year.
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Statistics Canada reported Dec. 21 that the consumer price index increased 6.8 per cent from November 2021, down from year-over-year increases of 6.9 per cent in September and October, as the cost of gasoline and furniture fell.
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Grocery prices, rent and mortgage costs continued to exert the most upward pressure on the broader cost of living, Statistics Canada said. Various supplementary gauges showed “core” inflation, which strips volatile prices out of the headline calculation to get a better sense of the trend, was hovering around five per cent, little changed from the previous month.
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The headline number is still a long way from the Bank of Canada’s target of two per cent, which governor Tiff Macklem insists he will hit, no matter what. But it’s down from 8.1 per cent in June, suggesting the combination of lower commodity prices, a more fluid supply of goods and an unprecedented spike in policy interest rates are beginning to tame the most dangerous burst of inflation since the early 1980s.
“The headline has come down a bit, and that is some relief,” Macklem said in an interview on Dec. 19. The governor said various inflation measures likely will remain “uncomfortably high” for a few months, “but we get to the spring, snow melts, we expect to see the cumulative effect of our interest rates will really start to work and we should really start to see core (inflation) moving lower. If we start to see that, that will certainly be comforting.”
More to come …
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