Inflation holds steady in Canada — but grocery and rent costs are still squeezing households

Canada’s inflation rate held steady in November, signalling that price pressures are easing — but not disappearing. The Consumer Price Index (CPI) rose 2.2% year over year, unchanged from October and still within the Bank of Canada’s 1% to 3% target range, according to the latest data from Statistics Canada (1).

While headline inflation has cooled from earlier highs, the underlying story remains uneven. Food prices continue to rise faster than overall inflation, and shelter costs remain elevated, keeping pressure on household budgets even as energy prices offer some relief. Excluding gasoline, inflation rose 2.6% year over year, underscoring the persistence of price pressures in everyday essentials.

This is good news for anyone suffering with higher living costs, given that Canada's inflation had been ticking up in September — the first acceleration in headline inflation since May.

Grocery prices remain a key pain point

Food prices continue to be one of the clearest stress points in the inflation picture. Grocery costs rose about 4.7% year over year, outpacing headline inflation and marking one of the fastest increases among major CPI components.

Statistics Canada data show higher prices for fresh fruit, vegetables and prepared foods were among the main contributors. Supply constraints, transportation costs and labour pressures have kept food inflation elevated even as broader inflation trends moderate.

Economists say food prices tend to cool more slowly than other categories, meaning consumers often feel the impact of inflation long after headline numbers improve.

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Shelter costs stay elevated — but show signs of stabilizing

Shelter remains the largest and most persistent driver of inflation. Overall shelter costs rose about 2.3% year over year, reflecting slower — but still elevated — price growth compared with earlier in the year.

Rent growth remains uneven across the country. While some provinces have seen cooling, tight rental markets in major urban centres continue to push prices higher for many tenants. The result is a shelter category that no longer spikes month to month but remains structurally sticky, particularly for renters and recent homebuyers.

Mortgage interest costs, while no longer surging at the same pace as in 2023, continue to weigh heavily on homeowners renewing at higher rates.

Energy prices offer limited relief

Energy prices, including gasoline, have been less volatile in recent months and are no longer the dominant force shaping inflation. The fading of last year’s base-year effects has reduced sharp swings in fuel prices, helping keep headline inflation stable.

That moderation has helped offset continued pressure from food and shelter — but economists caution that energy alone cannot deliver meaningful relief if core inflation remains elevated.

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Inflation remains within target — but above the comfort zone

Despite the stabilization, inflation still sits above the Bank of Canada’s preferred 2% midpoint, keeping policymakers cautious.

“Food prices are volatile in Canada, so I wouldn’t read too much into any one month,” said Nathan Janzen, assistant chief economist at RBC, in an interview with CBC News. “But food price growth has been sticky, and this has been a persistent phenomenon in recent years.”

RBC economist Abbey Xu said in a statement to Global News that most of the recent inflation pressure reflects temporary factors, while core measures continue to show gradual improvement. Xu noted that inflation outside volatile categories appears to be easing — though not fast enough to fully relieve household budgets.

What this means for interest rates

The November CPI data reinforce a growing consensus among economists: inflation is contained, but not fully conquered.

For the Bank of Canada, that means monetary policy decisions are likely to remain cautious and data-dependent. While inflation is no longer forcing urgent action, sticky core measures and elevated food and shelter costs complicate the timing of future rate cuts.

Policymakers are focused less on where inflation is today and more on whether current trends are durable enough to justify easing borrowing costs without reigniting price pressures.

Bottom line for Canadians

For many Canadians, inflation may feel like it has peaked — but not passed. Stable headline numbers offer reassurance that prices are no longer spiralling, yet everyday essentials remain expensive, and relief at the checkout or rent payment has been slow to materialize.

As inflation settles into a narrower range, the gap between economic data and lived experience remains wide — especially for households grappling with rising food costs and limited housing options.

— with files from Romana King

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Statistics Canada (1)