Canada’s annual inflation rate held steady in November, but grocery prices saw a notable uptick, reaching their highest level in almost two years, according to Statistics Canada. The overall inflation rate remained at 2.2 percent, with food prices surging 4.7 percent compared to the same period last year, marking the largest increase in grocery price growth since December 2023.
The spike in grocery prices was primarily driven by fresh fruit, particularly more expensive berries, and “other food preparations,” which mainly include processed foods. Coffee prices continued to rise, jumping by 27.8 percent year-over-year in November, attributed to adverse weather conditions in coffee-producing countries and U.S. tariffs.
Additionally, the cost of fresh and frozen beef surged by 17.7 percent last month, contributing to inflation pressures as cattle inventories shrink across North America. RBC senior economist Claire Fan highlighted that supply-side constraints, including severe weather conditions, were key drivers of the food inflation increase. She noted that Canadian importers might still feel the impact of U.S. exporters passing on cost increases along food manufacturing supply chains.
On another front, the core inflation monitored by the Bank of Canada eased in November. Services prices witnessed slower growth, with travel tours and accommodations costs declining. The drop in year-over-year prices was partly due to a base-year effect related to increased tourism spending in Toronto during the same period last year, driven by a series of concerts by Taylor Swift at Rogers Centre.
Rent prices also saw a slower pace of growth in November, up 4.7 percent year-over-year compared to October’s 5.2 percent. However, higher prices for cellular services offset some of the decrease in service inflation, rising by 12.7 percent in November compared to 7.7 percent in October due to fewer promotions offered in November 2025.
The Bank of Canada’s core inflation measures, excluding volatile components like food and gas, either eased or remained stable in November. This trend suggests that significant interest rate hikes are not imminent, according to Fan. Despite signs of economic improvement, additional rate cuts are not expected, as the Bank of Canada has signaled a pause in rate reductions for the time being.
