Consumer prices rose 2.6 percent from a year earlier, after a 3.4 percent pace in September that was close to the fastest since March 2003, Statistics Canada said today in Ottawa. Prices declined 1 percent on a monthly basis. Economists in a Bloomberg survey predicted a 3.1 percent annual inflation rate and a 0.6 percent month-over-month decline, the median of 20 estimates.
The Bank of Canada, which lowered interest rates by three- quarters of a percentage point last month, said at the time that a lack of available credit and a global downturn would depress consumer prices. Canada's inflation rate will slow to 1 percent between June and December of next year, half the central bank's target, according to a forecast released Oct. 23.
Policy makers set interest rates to keep inflation between 1 percent and 3 percent, with an optimal target of 2 percent. Bank of Canada Governor Mark Carney said two days ago that risks to the world's eighth-biggest economy from a global credit crisis and recession have widened in the past month and hinted he'll cut rates further.
Excluding gasoline and seven other volatile items, inflation remained at 1.7 percent in October from a year earlier, less than the 1.9 percent economists anticipated, and fell 0.2 percent from September. Economists predicted so-called core prices would stay the same on a monthly basis.
Prices at gasoline filling stations were up 13 percent between October 2007 and last month, compared with a 27 percent year-over-year gain in September, the statistics agency said.
Clothing and footwear prices fell 2.8 percent in October from a year ago, the 10th straight decline, led by 5.8 percent drop in women's apparel.
The price index for shelter increased 3.8 percent over the 12-month period, compared with a 4.5 percent gain in September, the agency said.
Food price inflation accelerated for an eighth straight month in October to 6.1 percent from a pace of 5.6 percent in September. The gain was led by a 16 percent increase in bakery and cereal products.