Canada’s inflation rate tumbled to 2% in November as recession-ravaged businesses cut prices to keep customers coming, Statistics Canada reported Friday.

The national consumer price index increase dropped to 2% in the month compared with October’s 2.6% figure. November’s reading represented an even larger drop compared with the September CPI of 3.4%.

“The slowdown in November was due primarily to gasoline prices, which were 14.4% below November 2007 levels, and far offset increases for food and shelter items,” said StatsCan said in a release announcing the November numbers.

What was once a crude price of $147 US a barrel in the summer is now in the $40 range. The crude reduction has led to gasoline prices falling in lockstep. Pump costs were down 21% in November compared with October.

Once energy costs were subtracted from the overall November figures, prices actually gained 1.4% in the 12 months from last November compared with the 12-month period from October 2007.

Clothing and footwear prices also fell, down 2.4% in November.

On the upside, food costs jumped for the ninth month in a row, up 7.4%. In this category, vegetable prices spiked 28% in November while costs for baked goods rose nearly 13%.

Bank of Canada’s core index posts strong increase

The Bank of Canada’s core index — which excludes eight of the most volatile CPI components — advanced 2.4% over the 12 months to November, a much higher rise than the 1.7% rate of growth posted in October. The increase was due primarily 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% compared with the more robust 12-month drop of 9% in October.

The seasonally adjusted monthly core index rose 0.5% from October to November, after posting no growth from September to October.

IE