Canada’s core inflation rate rose 0.60% month-over-month in November 2025, marking the highest monthly increase since early 2024. This figure notably exceeds both the market consensus of 0.40% and the prior month’s 0.20%, signaling a resurgence of underlying price pressures. Over the past 12 months, the average monthly core inflation rate has hovered around 0.25%, making this latest print a significant outlier.

Drivers this month

• Shelter costs contributed approximately 0.18 percentage points, reflecting rising rents and home prices.
• Energy prices, while volatile, added 0.12 percentage points due to supply constraints.
• Used vehicle prices declined slightly, subtracting 0.05 percentage points, partially offsetting gains.

Policy pulse

The 0.60% MoM core inflation rate sits well above the Bank of Canada’s 2% annual inflation target, suggesting persistent inflationary pressures. This may prompt the central bank to consider further tightening measures or maintain a hawkish stance in upcoming policy meetings.

Market lens

Immediate reaction: The Canadian dollar (CAD) strengthened by 0.30% against the USD within the first hour post-release. Two-year government bond yields rose by 12 basis points, reflecting increased expectations of rate hikes. Breakeven inflation rates also edged higher, signaling market anticipation of sustained inflation.

The core inflation rate is a critical gauge of underlying price trends, excluding volatile food and energy components. Its sharp rise to 0.60% MoM in November contrasts with the subdued 0.20% in October and the flat readings recorded in September 2025. This acceleration aligns with other macroeconomic indicators signaling tightening conditions.

Monetary Policy & Financial Conditions

The Bank of Canada has maintained a series of interest rate hikes throughout 2025, pushing the policy rate to 5.25%. The elevated core inflation rate increases the likelihood of further tightening. Financial conditions have tightened accordingly, with credit spreads widening and mortgage rates rising, which may dampen consumer spending in the medium term.

Fiscal Policy & Government Budget

Canada’s fiscal policy remains moderately expansionary, with a 2025 budget deficit projected at 1.80% of GDP. Increased government spending on infrastructure and social programs supports demand, potentially fueling inflation. However, fiscal discipline efforts aim to balance growth and inflation risks over the next two years.

External Shocks & Geopolitical Risks

Global supply chain disruptions and geopolitical tensions, particularly in energy markets, have contributed to price volatility. The recent OPEC+ production cuts and North American energy export constraints have pushed energy prices higher, feeding into core inflation indirectly through transportation and manufacturing costs.

Market lens

Immediate reaction: The CAD/USD exchange rate rose 0.30% post-release, reflecting confidence in the Bank of Canada’s hawkish stance. The 2-year Canadian government bond yield jumped 12 basis points, while breakeven inflation rates moved up by 8 basis points, signaling market pricing of sustained inflation risks.

Looking ahead, the trajectory of Canada’s core inflation will depend on several interacting factors. We outline three scenarios with associated probabilities:

Bullish scenario (20% probability)

• Inflation moderates to 0.30% MoM by Q1 2026 due to effective monetary tightening and easing supply constraints.
• Consumer demand softens, and wage growth stabilizes, reducing inflationary pressures.

Base scenario (55% probability)

• Core inflation remains elevated around 0.40-0.50% MoM through early 2026, reflecting persistent but manageable price pressures.
• Monetary policy tightens moderately, balancing growth and inflation risks.

Bearish scenario (25% probability)

• Inflation accelerates above 0.70% MoM due to renewed supply shocks or fiscal stimulus.
• Central bank faces pressure to aggressively hike rates, risking recessionary outcomes.

Structural & Long-Run Trends

Canada’s inflation dynamics are increasingly influenced by structural factors such as housing supply constraints, demographic shifts, and evolving labor market conditions. These long-run trends may sustain a higher inflation baseline, complicating the central bank’s task of anchoring expectations.

The November 2025 core inflation rate MoM print of 0.60% is a clear signal that inflationary pressures in Canada are intensifying. This development challenges policymakers to balance inflation control with growth support amid external uncertainties and fiscal dynamics. Financial markets have responded swiftly, pricing in a more hawkish monetary policy path. Close monitoring of upcoming data releases and geopolitical developments will be crucial to navigating the evolving macroeconomic environment.

Key Markets Likely to React to Core Inflation Rate MoM

Core inflation data significantly influences Canadian financial markets, affecting currency strength, bond yields, and equity valuations. The following tradable symbols historically track or react to inflation shifts, offering insight into market sentiment and risk appetite.

• CADUSD: The Canadian dollar’s exchange rate against the US dollar is sensitive to inflation-driven monetary policy changes.
• RY: Royal Bank of Canada, a major financial institution, is impacted by interest rate shifts linked to inflation.
• ENB: Enbridge, an energy infrastructure company, correlates with energy price-driven inflation components.
• BTCUSD: Bitcoin often reacts to inflation expectations as a perceived hedge.
• USDCAD: The inverse of CADUSD, reflecting currency strength shifts post-inflation data.

Extras: Core Inflation Rate MoM vs. CADUSD Since 2020

Since 2020, spikes in Canada’s core inflation rate MoM have closely preceded appreciations in the CADUSD exchange rate. For example, the 0.50% MoM jump in March 2024 coincided with a 2.10% CADUSD rise over the following month. This pattern underscores how inflation data shapes currency markets by influencing expectations of monetary policy tightening.

Date	Core Inflation MoM (%)	CADUSD Change Next Month (%)
Mar 2024	0.50	2.10
Nov 2025	0.60	0.30 (immediate)
Jul 2023	0.40	1.50

FAQ

What is the Core Inflation Rate MoM for Canada?

The Core Inflation Rate MoM measures the monthly change in prices excluding volatile food and energy sectors, providing insight into underlying inflation trends.

How does the latest Core Inflation Rate MoM impact monetary policy?

A higher-than-expected core inflation rate increases the likelihood of further interest rate hikes by the Bank of Canada to contain inflation.

Why is monitoring Core Inflation Rate MoM important?

It helps gauge persistent inflation pressures, guiding policymakers and markets on future economic conditions and financial stability.

Takeaway: Canada’s 0.60% core inflation rate MoM surge signals persistent price pressures, likely prompting tighter monetary policy and impacting financial markets.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.