The rising costs of home ownership significantly contributed to a 0.7% annual acceleration in inflation last month, according to Statistics Canada. October’s level almost doubled the 0.4% growth projected by Bloomberg-polled economists.
This movement came amid the greatest monthly increase in replacement costs for Canadian home owners, 1.4%, since 1991, Bloomberg reported. However, overall price pressures are still subdued as the second wave of COVID-19 infections gradually takes hold nationwide. The price index went up 0.4% monthly, with food and shelter costs accounting for much of the increase.
“October marks a mild high-side surprise for Canadian inflation,” said Doug Porter, chief economist at the Bank of Montreal. “But the big picture is that inflation remains below one per cent, and probably isn’t going far with the economy about to face some further near-term challenges amid renewed restrictions.”
In its latest reiteration of its commitment to keep rates at record lows for the foreseeable future, the Bank of Canada said that prolonged economic recovery will require “extraordinary monetary policy support” that will likely last until “economic slack is absorbed so that the 2% inflation target is sustainably achieved.”
“We are committed to providing the monetary policy stimulus needed to support the recovery and achieve the inflation objective,” the bank said in its October 28 rate decision.