Inflation Rebounds to 2% in October 2024 in Canada

Spike driven by higher energy and food costs

Ottawa, Ontario - Statistics Canada reported on November 21, 2024, that Canada's inflation rate climbed to 2.0% in October, a rebound from the previous month's 1.7% annual increase. This development aligns with expectations and remains within the Bank of Canada's target range of 1% to 3%.

Energy and food costs fuel inflation

The rise in inflation was primarily driven by higher energy prices, particularly gasoline, which increased by 17.6% compared to October 2023. Food costs also contributed to the increase, with a 3.7% jump in the grocery index.

The increase in inflation highlights the ongoing impact of global economic factors, including supply chain disruptions and the war in Ukraine, on the Canadian economy. The Bank of Canada has been raising interest rates to combat inflation, with the benchmark interest rate currently at 4.00%.

Mixed reactions from economists

Economists have mixed reactions to the inflation data. Some argue that the rebound is a sign that inflation is becoming more entrenched and could remain elevated for longer than anticipated. Others believe that the increase is temporary and that inflation will moderate as supply chain issues ease and the war in Ukraine ends.

The Bank of Canada is expected to continue monitoring inflation closely and will likely raise interest rates further if necessary to bring inflation back to its 2% target.