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Canada's annual inflation rate was unchanged in November, but grocery store inflation hit its highest level in nearly two years, Statistics Canada reported Monday.
The overall inflation rate was 2.2%. But the figure has largely lagged behind food since August 2024, rising 4.7 percent year-on-year in November.
This marked the biggest increase in food price increases since December 2023.
Fresh fruit, especially higher-priced berries, contributed to the increase, as did “other foods” (a category that largely includes processed foods).
Coffee prices remain stubbornly high, up 27.8% year-on-year in November. The trend continues as coffee-growing countries face adverse weather conditions and U.S. tariffs.
Meanwhile, fresh and frozen beef (up 17.7 percent last month) continued to weigh on inflation, with prices rising in part due to declining cattle numbers across North America.
“The rise in food inflation was driven by a combination of supply-side constraints, including severe weather,” RBC senior economist Claire Phan wrote in a note to clients.
“And even though Canadian importers do not pay the tariffs themselves, prices in Canada could still be impacted as U.S. exporters pass along corresponding cost increases through food production supply chains,” she explained.
Bank of Canada core inflation slows in November
Outside the grocery store, service prices rose more slowly in November as tour and lodging prices fell.
The year-over-year decline was largely due to a base year effect: Last year at this time, Toronto was seeing a surge in tourism spending due to Taylor Swift's six-show concert at Rogers Centre.
On the housing side, rental prices also rose at a slower pace last month, rising 4.7% year-on-year in November compared to 5.2% in October.
However, lower service inflation was partially offset by rising cellular service prices, which rose 12.7 percent in November, up from 7.7 percent in October. The decline was partly due to fewer promotions offered in November 2025 compared to the same period a year earlier.
The Bank of Canada's preferred measure of core inflation, which excludes volatile components such as food and gas, fell or remained steady in November.
This should reinforce the fact that “the central bank will not have to move to directly raise interest rates in the near future,” Fan writes.
“However, we also expect that the economy has shown enough signs of improvement that an additional overnight rate cut will not be necessary,” she said.
The Bank of Canada recently said it has cut rates for now.
