Canada CPI 2.2%: Grocery Prices Surge 4.7% as Beef and Coffee Spike

Overall inflation matched expectations, but grocery prices spiked 4.7% year-over-year, the highest jump since December 2023. Experts anticipate the Bank of Canada will hold rates through 2026.

Statistics Canada announced today that the annual inflation rate for November held steady at 2.2%, unchanged from the previous month and slightly lower than economists’ forecasts. However, persistent increases in grocery store prices continue to strain consumers.

🚨 Alert: Food Inflation Hits One-Year High

In November, grocery prices increased by 4.7% year-over-year, up from 3.4% in October, marking the biggest spike in food inflation since December 2023.

Certain food categories saw exceptional price hikes:

• Beef: Prices for fresh or frozen beef jumped 17.7% year-over-year, partly due to lower cattle inventories in North America.

• Coffee: Refined coffee prices soared 27.8%, receiving a jolt from a combination of poor weather in growing regions and American tariffs on coffee-producing countries. (Note: U.S. President Donald Trump removed tariffs on some products, including coffee, in mid-November).

• Other Drivers: Fresh berries and pre-packaged foods like chips and soups were cited as major contributors to the accelerated food inflation. A separate report forecast consumers could pay $1,000 more for groceries in 2026.

📉 Offsetting Factors: Travel and Accommodation

While food prices surged, consumers found some relief in other sectors:

• Gasoline: Gasoline prices fell 7.8% compared to a year earlier, though they rose 1.8% month-over-month due to refinery disruptions.

• Travel Accommodation: Tourist package prices decreased by 8.2%, and traveler accommodation prices dropped 6.9% year-over-year. Statistics Canada noted that the drop in Ontario (-20.2%) was partially a base-year effect, as hotel prices were dramatically inflated in November 2024 due to the Taylor Swift Eras Tour concerts in Toronto.

Bank of Canada Outlook: Holding Steady

Following its decision last week to keep the benchmark interest rate unchanged at 2.25%, the Bank of Canada will continue to monitor underlying pressures.

• Core Inflation: CIBC Senior Economist Andrew Grantham noted that core inflation measures decreased in November, suggesting some underlying price pressure is easing. However, he maintains that core inflation “is still too high to argue for further cuts”.

• Forecast: Both CIBC and TD expect the Bank of Canada to maintain the overnight rate at its current level throughout 2026. TD warns of potential “volatility” in upcoming inflation reports due to the base effect of the GST holiday that began in mid-December last year.