The loonie falls below 70 cents US as November inflation slows

The annual inflation rate slowed to 1.9 per cent in November, Statistics Canada reported on Tuesday.

The agency attributed the decline to a “broad-based” slowdown in price increases, particularly in travel tours and mortgage costs, which helped ease inflation. This marks a drop from October’s inflation rate of 2 per cent.

November’s inflation figures come amid ongoing economic struggles in Canada and efforts by the Bank of Canada to stimulate growth by lowering its key interest rate ahead of 2025.

Meanwhile, the Canadian dollar fell below 70 cents against the US dollar on Tuesday morning, its lowest level since the early days of the COVID-19 pandemic. This decline continues a difficult end to 2024 for the loonie.

The Canadian currency has weakened in recent weeks compared to the US dollar, largely due to Donald Trump’s re-election, which has created uncertainty and drawn investors towards the American greenback. This depreciation is increasing the cost of imports from the US, particularly for vehicles and some groceries.

“Today’s drop in the Canadian dollar reflects several challenges it faced this year, including declining inflation, weak economic growth, and political uncertainty, which together have pushed it to its lowest level since March 2020,” said Kyle Chapman, a foreign exchange market analyst at Ballinger Group, in an email to Global News on Tuesday.

Inflation slows, but Taylor Swift’s tour impacts prices

On a monthly basis, Statistics Canada noted that petrol prices remained stable in November.

Annual grocery store prices increased by 2.6 per cent, slightly less than October’s rise. Black Friday sales contributed to price declines in November, particularly for mobile services and furniture. The cost of children’s clothing saw a record monthly drop of 4.9 per cent for November.

Although rents were higher in provinces like Ontario, Manitoba, and Nova Scotia, a slowdown in the mortgage interest cost index helped moderate housing inflation last month. Mortgage costs are still rising, but at a slower pace than a year ago. Mortgage expenses and rent remain the primary drivers of inflation in Canada.

While cheaper travel tours helped cool inflation in November, the agency noted that hotel room prices in Ontario surged during Taylor Swift’s Eras Tour in Toronto.

Statistics Canada reported that the cost of renting a hotel room in November rose 23.7 per cent annually, compared to a 1.3 per cent rise in October. On a monthly basis, hotel accommodation prices in Ontario increased by 11 per cent—the sharpest November rise on record—coinciding with several high-profile concerts.

CIBC senior economist Andrew Grantham remarked in a client note that the inflationary impact of the Taylor Swift concerts was less pronounced than anticipated.

“While hotel prices increased, there was no notable change in airline fares, restaurant prices, or other categories,” Grantham said.