Canada’s inflation rate of 2.2 per cent in October is approaching the Bank of Canada’s target of two per cent, but some underlying inflation numbers have economists expecting policymakers to hold rates at their next meeting.
Here’s what they had to say about the latest consumer price index (CPI) numbers:

‘Tad disappointing’: BMO

Bank of Montreal chief economist Douglas Porter called Monday’s inflation data “a tad on the disappointing side,” mainly because the dip in inflation was largely from a drop in gasoline and food prices, while other measures rose.
Rent, which Porter called the single biggest driver of inflation, was back up to 5.2 per cent year over year, while telephone services had the largest yearly price increase since 1982.
“Still, a pullback in grocery prices, perhaps in part courtesy of the rollback in retaliatory tariffs, helped moderate the Bank of Canada’s core measures,” he said in a note.
Porter called the CPI report “mildly friendly” on the surface, but said the underlying numbers aren’t great, meaning the Bank of Canada is likely to once again hold rates again at its next meeting on Dec. 10.

Inflation a ‘mixed bag’: RBC

The inflation reading was a mixed bag for the Bank of Canada, according to Royal Bank of Canada economist Abbey Xu.
On one hand, median price growth was up only 0.1 per cent, but the three-month average remained above 2.5 per cent.
Still, inflation fell in line with what Xu was expecting, as resilient consumer demand has kept prices elevated, leading her to expect an interest rate hold in December.
“The (Bank of Canada) has indicated the overnight interest rate is ‘about the right level’ provided inflation and economic activity continue following the October projections,” she said in a note. “Given that backdrop, we do not expect further interest rate reductions from the (Bank of Canada).”

‘Encouraging signs’: Capital Economics

Despite inflation coming in a little higher than expected, Stephen Brown, deputy chief North America economist at Capital Economics Ltd., said the good news for the Bank of Canada is that the drivers of inflation in October were “concentrated in a narrow range of items,” including local property taxes and recreation.
“While it is still early days and the three-month annualized rate only edged down to 2.6 per cent, from 2.7 per cent, that lends some support to our view that the (Bank of Canada) is overestimating underlying inflation pressures,” he said in a note.
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Brown said the 0.4 per cent rise in recreation costs was likely due to the Toronto Blue Jays’ run to the World Series.