CAD steady after November CPI meets forecasts and underlying pressure eases

November’s Canadian inflation report made steady headlines while offering the Bank of Canada (BOC) its first clear signal in months that underlying price pressures are finally cooling.

This was reported by Statistics Canada the overall CPI was unchanged at 2.2% y/y in Novemberwhich is in line with October, but slightly below the consensus forecast of 2.3%. Monthly CPI up 0.1%which was in line with expectations and down from a 0.2% increase in October.

The key development came from the BOC’s prevailing core measures, which have hovered stubbornly around 3% since April when US tariffs began to weigh on prices in Canada.

Both Median CPI and CPI-trim fell to 2.8% from 3.0% in Octoberfor the first time since March, the measures fell below the upper end of the central bank’s 1-3% control range.

Key conclusions

• Headline inflation held at 2.2% y/y in November, slightly below consensus of 2.3%, but unchanged from October
• The size of core inflation finally fell below 3%, with both the median CPI and CPI falling to 2.8% from 3.0% the previous month
• Food inflation accelerated to 4.2% y/y, the fastest pace since December 2023, thanks to a 4.7% rise in food prices and a 3.3% rise in restaurant prices
• Gasoline prices fell 7.8% y/y, a smaller drop than October’s 9.4% decline, although monthly prices rose 1.8%
• Rent inflation fell to 4.7% from 5.2%, while services inflation slowed to 2.8% from 3.2% as travel costs fell sharply

Link to Official Canadian Consumer Price Index (November 2025)

The slowdown in core inflation has helped calm concerns that persistent inflation and weak growth are happening at the same time, even as food prices remain high.

With the CPI average and the CPI cap finally falling below 3%, economists see core inflation moving closer to the 2% target. what supports the idea that BOC can remain on hiatus longerrather than rush into more cuts or worry about rate hikes.

Market reactions

Canadian Dollar vs. Major Currencies: 5 min

The yield on Canada’s two-year government bond fell 2.3 basis points to 2.486%, reflecting some easing of expectations for a rate hike as data confirmed core inflationary pressures are easing rather than rising.

But while the easing of core inflation was a positive sign, the central bank had already said at its December 10 meeting that interest rates were “around the right level” after a significant cut of 275 basis points. Governor Tiff Macklem also made it clear the bank was comfortable staying on hold for now as it watched the economy respond to lingering trade tensions with the U.S.

That’s probably why the Canadian dollar was unable to sustain its initial moves after the event during the US session. The Loonie, which strengthened shortly before the Canadian CPI release, briefly eased on cooler core CPI prints, but soon saw mixed price action against its major peers.

Comdoll found an intraday low a few hours after the start of the US session and ended the session near the pre-CPI level. CAD ended the day mixed, trading higher against the safe-haven US dollar and Swiss franc and the Australian dollar and New Zealand dollar, but lower against the euro, yen and pound sterling.