Canadian CPI remained steady at a 17-month low of 1.6% in November, according to a report published today by Standard & Poor’s Ratings Services. This was unchanged from a month earlier but down significantly from 4.6% at the start of 2003, when CPI reached its highest point in more than a decade.

The cumulative decline of 3 percentage points in Canada’s overall inflation rate has been the largest since 1998.

“Falling energy prices have been a key contributor to this trend, but nonenergy prices in the CPI basket also have been on a downward path since the beginning of the year,” said Standard & Poor’s economist and fixed income analyst Rob Palombi. As a result, Canada’s core inflation rate, at 1.8% in November, continues to track below the Bank of Canada’s 2% target.

S&P notes that downward price pressures have been notable for gasoline, automotive vehicles, electricity, and traveler accommodation. Gasoline prices dropped 4.2% in November on a year-over-year basis. Prices generally have been on a declining trend compared with 2002. The price index for automotive vehicles remains 1.6% lower than in November 2002. Changes in the Province of Ontario’s electricity regulation during the year were responsible for the 4.6% drop in the electricity index. Traveler accommodation prices plummeted 8.8% in a 12-month period. This is a continuation of the trend in place since 2001. Geopolitical uncertainty, severe acute respiratory syndrome, the global economic slowdown, and more recently a strengthening Canadian dollar disrupting activity in the tourism industry, have all contributed to the downward trend on traveler accommodation prices.

Components of the CPI basket that have put upward pressure on inflation include automotive vehicle insurance premiums, natural gas prices, tuition fees, homeowners’ replacement costs, and homeowners’ insurance premiums.