BRITISH COLUMBIA – Canadian prices, as measured by the Consumer Price Index (CPI), rose 4.7 per cent on a year-over-year basis in October, rising at the fastest rate since 2003.
On a month-over-month basis, the CPI was up 0.7 per cent in October. The Bank of Canada‘s preferred measures of core inflation (which use techniques to strip out volatile elements) rose an average of 2.7 per cent year-over-year in October. Major drivers of the year-over-year price increase included transportation prices (+10.1 per cent), shelter (+4.8 per cent) and food prices (+3.8 per cent) partly on continuing supply-chain difficulties.
In BC, consumer prices were up 0.43 per cent month-over-month, and up 3.8 per cent on a year-over-year basis.
Inflation continues to run ahead of the Bank of Canada’s 2 per cent target. The driving force behind rising prices in October was a 10 per cent increase in transportation costs due to rising gasoline prices.
Inflation from shelter costs was up month-over-month as home prices trended higher after flattening out over the summer. Those categories continue to account for about 60 per cent of the year-over-year rise in consumer prices.
We expect this elevated level of inflation to persist through next year before prices begin moderating. The Bank of Canada is clearly concerned about rising consumer prices and have signaled that it will begin raising its policy rate in the second or third quarter of 2022