Canada's inflation rate heats up to 2.4% in October

Higher prices for food and shelter drove Canada's inflation rate up to 2.4 per cent last month, Statistics Canada data showed Friday.

That's much higher than the two per cent rate economists had been expecting. More importantly, it's also higher than the 2.1 per cent showing that the Bank of Canada is currently predicting for the fourth quarter — meaning they could have to adjust their expectations while making interest rate decisions.

Prices increased in every province and territory. Alberta saw the highest rate, at three per cent. British Columbia had the lowest rate, at just over one per cent.

The agency reported that food and shelter costs led the rise in the consumer price index during the month. Shelter costs includes everything from gas and electricity bills, to property taxes, rent and mortgage payments. 

All those things were a lot more expensive in October of 2014 than they were in the same month a year ago.

The 2.4 per cent figure is an increase of point-four percentage points from September's rate. It also ties the highest inflation rate we've seen since early 2012 — more than two and a half years ago.

• Gasoline prices hit 4-year low

Food and shelter weren't the whole story, however. Prices for items like transportation, clothing and footwear were also higher, and a big factor in the increase.

The cost of getting around increased by 1.1 per cent on an annual basis in October. That's twice as high as the rate seen last month, and especially strong considering how much gas prices fell by during the month.

As Scotiabank noted after the numbers came out, it's telling that the cost of living increased in a time when prices for oil were in freefall. "The bigger surprise is that headline inflation managed to stay in positive territory on a month-over-month basis despite falling commodity prices," the bank said.

Price increases for items such as airplane tickets and new cars offset cheaper pump prices to push the transportation index higher, Statistics Canada said.

Looking at specific goods, the report says the climbing year-over-year prices of natural gas at 20.1 per cent, cigarettes at 11.5 per cent and meat at 12.4 per cent were among the biggest contributors to the increase.

Some of the biggest price decreases on goods included video equipment at 8.4 per cent, digital computing equipment and devices at 5.5 per cent and furniture at 2.9 per cent.

"The basket of goods that you're buying every month is getting more expensive, but it's rising at a little bit of a faster pace than we've been used to in the past, at least the recent past," said Robert Kavcic, a senior economist with BMO Capital Markets.