Canadian inflation ticked 0.4 points lower to 2 per cent in the 12 months to November as falling energy prices slowed the increase in aggregate consumer prices. In particular, gas prices fell 5.9 per cent year-over-year and 7.5 per cent from October, their fifth consecutive monthly decline. The Bank of Canada's core measure of inflation, which excludes the most volatile prices such as energy and food products, registered inflation of 2.1 per cent. That marked a deceleration from 2.3 per cent in October. Consumer prices in BC fell for a second consecutive month on a month-over-month basis, but were up a modest 1.2 per cent year-over-year.
Falling oil prices are having a predictable impact on Canadian inflation, and that impact should become more pronounced in 2015. We anticipate that both CPI and core inflation will trend below the Bank of Canada's 2 per cent target for much of next year, which should allow the Bank to remain relatively cautious in its approach to monetary policy.