Statistics Canada to detail October inflation reading

Daniel Fowler
November 18, 2020

The consumer price inflation came in at 0.7 percent year-on-year, an acceleration from September's 0.5 percent.

"The rate of inflation increased slightly as clothing prices grew, returning to their normal seasonal pattern after the disruption this year", said Office for National Statistics deputy statistician Jonathan Athow.

Meanwhile, food prices rose 0.1 percent in the month, as compared with a decline of 0.7 percent in October 2019.

The increase was nearly entirely driven by rising food prices, particularly lettuce and fresh or frozen chicken, Statistics Canada said Wednesday.

On a monthly basis, the average price of a property in the United Kingdom has risen by 1.7%.

Food prices rose between September and October, with most of the increase coming in fruit and vegetables, the ONS said.

Things aren't expected to get much better, even as retailers hope to entice shoppers into an earlier start to the Christmas shopping season.

'These were partially offset by falls in the cost of energy and holidays'.

It revealed that gas prices dived by 12.3 per cent and electricity prices slumped 3.2 per cent between September and October. Excluding the drop from calculations, the headline inflation reading would have increased on a year-over-year basis of one per cent.

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The agency says rising housing costs contributed the most to the year-over-year increase as lower mortgage rates have coincided with increased demand for single-family homes.

Concerning the outlook for inflation, economists at PwC say the current UK-wide lockdowns will sap price growth from the economy into year-end.

The rise in inflation surpassed the expectations of analysts, who had predicted it would stay flat at 0.5%.

"The Bank of Canada has told us they're not going to hike rates until inflation gets sustainably above their target, and we're still below their target", said Doug Porter, chief economists at BMO Capital Markets.

The largest downward pressure on inflation was caused by a fall in household energy prices.

That may force the central bank to leave stimulus in the economy for a little longer to help coax inflation back up to its comfort zone of two per cent, he wrote in a note.

The Canadian dollar gave back some of its earlier gains after the data, trading up 0.1% at 1.3089 to the greenback, or 76.40 US cents.

The Retail Price Index (RPI), a separate measure of inflation, was 1.3 per cent in October, rising from 1.1 per cent in the previous month.

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