Cheaper closing and footwear contributed to a slowdown of inflation in November, while retail sales went up in October.

Cheaper closing and footwear contributed to a slowdown of inflation in November, while retail sales went up in October.
Photo Credit: Chris Young/Canadian Press

Inflation down, retail sales up: Statistics Canada

Canada’s inflation rate slowed down to 1.2 per cent in November largely because cheaper gasoline, food, clothing and footware, following a 1.5-per-cent gain in October, which was a hot month for Canadian retail sales.

Gasoline prices declined 1.7 per cent in November after increasing 2.5 per cent in October, Statistics Canada reported Thursday.

Food prices increased in November, however, they were still 0.7 per cent below their level from a year ago, marking only the third month since the year 2000 that food costs were in negative territory.

The clothing and footwear index was down 1.2 per cent compared to a year ago, led by a 6.5 per cent price decline in children’s clothing.

The year-over-year decline in prices for gasoline, food, clothing and footware was partly offset by hefty increases in prices for shelter with homeowners’ replacement costs and insurance up 4.4 per cent. Electricity prices were 3.5 per cent above the year ago level.

‘Christmas present’

At the same time, Statistics Canada reported that retail sales rose for the third consecutive month, rising 1.1 per cent to $45 billion in October.

“Today’s economic news delivered a Christmas present for the Canadian economy, showing heat in retail activity, but tame inflation that will allow the Bank of Canada to stick with the stimulus of low interest rates ahead,” Avery Shenfeld, CIBC chief economist, wrote in an analysis of Statistics Canada numbers.

“Along with yesterday’s solid news on wholesaling, that’s enough of a pleasant surprise to lift our monthly real GDP forecast for October to flat, vs. a small decline that we had earlier projected after a drop in manufacturing for the month.”

New methodology

This was the first report that showed the three inflations measures that the Bank of Canada has adopted The numbers were also interesting in that they are the first month under the data agency’s new ways of calculating inflation.

From here on in, Statistics Canada will release three new inflation metrics — CPI-common, CPI-median and CPI-trim — which all calculate the inflation rate in a slightly different way. This new methodology is expected to give the Bank of Canada a more complete picture of the actual cost of living so it can set its monetary policy accordingly.

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