Food prices rose at the fastest rate since December 2023 last month, even as Canada’s headline

inflation rate held steady at 2.2 per cent for the month, Statistics Canada said on Monday. The price of food purchased in stores rose by 4.7 per cent year-over-year in November, up from 3.4 per cent a month earlier. Prices for fresh and frozen beef were up 17.7 per cent from the year before and coffee was up 27.8 per cent. The higher beef prices were driven in part by a low herd size in North America, while price pressures on coffee have been driven by a combination of bad weather conditions and U.S. tariffs on coffee-producing countries.

“Higher grocery inflation was mostly a product of supply disruptions,” said Royal Bank of Canada senior economist Claire Fan, in a note. “Severe drought in parts of Western Canada in earlier years has thinned of the size of cattle herd in Canada, while dry weather in Brazil and Vietnam curbed coffee production and exports to the world.”

The continued pressure on food prices came as overall inflation held steady, and while measures of core inflation showed signs of cooling for the first time in months.

Factors putting downward pressure on the consumer price index (CPI) included decelerating price increases for services compared to October and lower overall prices for travel tours and accommodation, the latter driven mainly by a base year effect due to the spike in hotel prices for the Taylor Swift concerts in Toronto in November 2024.

Rental prices also rose at a slower pace, climbing by 4.7 per cent in November, compared to 5.2 per cent in October.

Core measures such as CPI-median rose by 2.8 per cent, the first time it has dipped below three per cent since May, while CPI-trim also rose by 2.8 per cent, the first time it’s been below three per cent since March. CPI excluding food and energy rose by 2.4 per cent last month, while CPI excluding gasoline rose by 2.6 per cent.

Servus Credit Union chief economist Charles St-Arnaud said the three-month annualized pace of core inflation had eased to 2.3 per cent, the slowest pace since August 2025.

“The core inflation momentum below three per cent suggests that the stickiness in core measures and price pressures is consistent with the Bank of Canada’s inflation target,” he said, in a note.

The Bank of Canada held its policy rate at 2.25 per cent at its last rate decision on Dec. 10, citing a resilient economy and contained inflationary pressures. Bank of Canada governor Tiff Macklem said the policy rate was “at about the right level” to keep inflation at two per cent and help the economy through a structural adjustment brought on by the trade war with the United States.

Looking ahead, Macklem said the bank does expect some choppiness in headline inflation in the new year, reflecting the temporary GST/HST holiday on some goods and services a year ago. The central bank also said that, as of right now, underlying inflation remains around 2.5 per cent.

“Despite choppiness in headline inflation, we expect excess slack in the economy will cause core inflation to gradually ease and return to two per cent by early 2027,” said Oxford Economics senior economist Michael Davenport, in a note.

Davenport added that the central bank is likely to look through this temporary choppiness and will keep rates on a hold for 2026.

Still, inflation was still running above three per cent for 42.2 per cent of the items in the CPI basket in November.

The price of cellular services rose by 12.7 per cent, up from 7.7 per cent in October.

Gasoline prices declined at a slower pace, falling 7.8 per cent in November, compared to a drop of 9.4 per cent the month before.

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