So-called core consumer prices rose 1.6 percent in November, the slowest since April 2006, compared with 1.8 percent a month earlier. Economists surveyed by Bloomberg News forecast the rate would remain unchanged. The all-items index rose 2.5 percent, from 2.4 in October, on gasoline prices.
Bank of Canada Governor David Dodge on Dec. 4 lowered the central bank's benchmark interest rate for the first time since 2004, saying a global credit slowdown and a high Canadian dollar are slowing economic growth and inflation. The strengthening currency has reduced the cost of imports for Canadian consumers.
``The deceleration we've seen in inflation gives the Bank of Canada continued room to cut rates,'' said Karen Cordes, an economist with Scotia Capital Inc. in Toronto.
Canada's currency fell 0.4 percent to C$1.00887 per U.S. dollar at 7:19 a.m. in Toronto, from C$1.0053 late yesterday. While the currency is up almost 16 percent against its U.S. counterpart this year, the second-most among 16 major currencies tracked by Bloomberg, it has retreated in recent weeks amid easing expectations for inflation and growth.
Fourteen of 16 economists surveyed by Bloomberg this month say the central bank will lower its 4.25 percent benchmark another 25 basis points at its next meeting on Jan. 22. The central bank tries to keep inflation at or near a target of 2 percent, and uses the core rate as a gauge of future trends.
Consumer prices rose 0.3 percent in November and the core index was unchanged.
Statistics Canada attributed the slowdown in annual core inflation to a 3.9 percent drop in prices for buying and leasing vehicles, caused by rebates from car manufacturers. Lower prices also were recorded for fresh vegetables, fruit and computer equipment.
Gasoline prices were 18 percent higher than in November 2006, while costs associated with owning a home rose 5.1 percent, the statistics agency said.