Canadian Inflation Slows But Rents Are Rising At The Fastest Rate In 40 Years

Canadian households are experiencing less intense inflation pain, but it still remains. Statistics Canada (Stat Can) data shows headline inflation in the Consumer Price Index (CPI) slowed in October. The deceleration was due almost entirely to falling gasoline prices, with inflation printing much higher numbers when excluded. Grocery and shelter costs continue to rise at astronomical levels. Rents are rising at the fastest rate in over 40 years. 

Canadian Inflation Slowed Due To A Gasoline Base Effect 

Canadian headline inflation showed a sharp deceleration primarily due to a base effect. The latest print shows annual growth fell to 3.1% in October, shedding 0.7 points from the previous month. Stat Can attributes virtually the whole drop to falling gas prices (-7.8%). CPI rose at 3.6% in the month, just 0.1 points slower when excluded.  

Canadian Inflation Is Slowing, But It’s Mostly Due To Gas

CPI annual growth for headline and headline excluding gasoline prices. 

Source: CREA; Better Dwelling.

Households saw the sharpest rise in optional spending segments like grocery and shelter. Kidding, just checking to see if you’re still paying attention.   

Grocery price inflation is still very high but it shows some signs of moderation. Annual growth was 5.4% in October, shedding 0.4 points from September. Progress, but it remains nearly triple the Bank of Canada’s inflation target.  

Canadian Shelter Costs Still Ripping, Rents Rising At A 40-Year Record Pace

Canadian shelter costs slowed in some segments but remained lofty despite deceleration. Annual growth of shelter costs slowed 0.1 points to 6% in October. Owned accommodations showed slight acceleration rising 0.4 points to 6.7% over the same period. Driving this trend was mortgage interest (+30.6%), a slight deceleration from September. Progress, finally. 

Canadian Renters Are Seeing Costs Rise At The Fastest Rate In 40 Years

The annual growth of rent in the Canadian Consumer Price Index (CPI).

Source: CREA; Better Dwelling.

Shelter costs for renters continue to be out of control. Rental inflation climbed 1.2 points to 8.2% in October, the highest growth in the past 40 years. The Federal government’s helicoptering of cash to support rental inefficiencies will almost certainly keep these numbers high. 

Generally speaking, inflation looks better. A few modeling issues will come into play and amplify the deceleration on paper. The real world impact of inflation falling faster on paper than reality is up for debate, but it’s most likely good news for real estate investors.