Driven by higher gasoline prices, Canada's annual inflation rate jumped to 2.1 percent in November, after a 1.4-percent yearly increase in October, Statistics Canada said on Thursday, announcing figures that beat both analyst expectations and Bank of Canada's ideal target of 2-percent inflation for possible interest rate hikes.
The annual inflation rate last month was the highest since January 2017, Statistics Canada said.
Excluding the gasoline price index, Canada's consumer prices increased by 1.5 percent year over year in November after having risen 1.3 percent in October.
Prices rose in seven of the eight major consumer price index (CPI) components, and the transportation and shelter indexes contributed the most to the price increases.
Gasoline prices jumped 19.6 percent year over year in November, following an increase of 6.5 percent on the year in October. "The increase was partly attributable to higher crude oil prices in November, as well as a monthly decline one year earlier," Statistics Canada said.
Among the Canadian provinces, gasoline prices increased the most in Alberta-by 30 percent on the year in November.
The higher gasoline prices contributed the most to the transportation prices increase of 5.9 percent annually in November, after a 3.0 percent rise in October.
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Commenting on the November inflation rate, Nick Exarhos at CIBC World Markets said in a note:
"We also got a beat on the inflation figures for November, with the monthly and year-on-year figures coming in a tick hotter than expected. Gasoline explained most of the acceleration, with the 6.5% gain on the month leaving pump prices nearly 20% higher than they were a year ago."
"The case for the Bank of Canada to follow the Federal Reserve in hiking interest rates is building," James Marple, an economist at Toronto-Dominion Bank, told CBC.
"Don't be surprised if it comes sooner rather than later," Marple said.
By Tsvetana Paraskova for Oilprice.com
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