The steep drop in gas prices again helped slow Canada's inflation rate, pushing it down to two per cent in November from 2.6 per cent in October.
According to Statistics Canada, gas prices were 14.4 per cent lower in November, compared to a year earlier -- far offsetting increases for food and shelter items.
On a monthly basis, gas prices fell 21.4 per cent from October to November 2008.
Core inflation, which excludes volatile items such as food and fuel, rose to 2.4 per cent in November from 1.7 per cent in October -- primarily due to smaller price decreases for purchasing and leasing passenger vehicles.
In the 12 months to November, prices to purchase and lease passenger vehicles fell 2.7 per cent compared with the more robust 12-month drop of 9 per cent in October.
Douglas Porter, deputy-chief economist at Bank of Montreal, called the jump in core inflation the "big story."
"The major mover here was a 7.2 per cent monthly spike in auto prices, as annual price adjustments for new vehicles are captured in November," he wrote in a note to clients.
"It's highly unlikely these big price increases can stick in this environment, but clearly the days of massive loonie-related discounts are miles behind us. The spike in car prices alone (with a near-9-per-cent weight in underlying prices), accounted for basically all of the upside surprise in core."
Porter said the figures show Canada is much less at risk of near-term deflation because of stronger underlying spending conditions and the weaker loonie.
Provincial statistics
Across Canada, growth in consumer prices slowed in all 10 provinces, with the most pronounced slowdowns in Nova Scotia and Prince Edward Island.
In Nova Scotia, prices rose an average of 1.3 per cent in November, compared to 3.4 per cent in October. In Prince Edward Island, growth slowed from 3.9 per cent to 2.3 per cent from October to November.
"In almost every case, the slowdown was due to falling gasoline prices," says the report.
Excluding gasoline, the Consumer Price Index jumped 2.8 per cent in November -- the fastest pace of growth since May 2003.
"The most significant individual contributors to November's 12-month increase in consumer prices were mortgage interest costs, natural gas prices and prices for various food items, particularly bakery and cereal products, as well as fresh vegetables," says the report.
Last month's inflation report, which focused on the month of October, showed the largest month-to-month dive in Canada's inflation rate in nearly half a century.
The drop -- 3.4 per cent in September to 2.6 per cent in October -- was also due to the sharp drop in gas prices.
With files from The Canadian Press
