TORONTO — Inflation likely hovered at or a little above the Bank of Canada’s two per cent target rate in November, economists expect, after Taylor Swift’s Eras Tour swept through Toronto and offered a temporary economic boost.
As of Friday, economists on average estimate the consumer price index rose two per cent, according to a Reuters poll. That would be unchanged from the October reading.
However, CIBC senior economist Andrew Grantham says inflation for the month could tick higher to 2.1 per cent, adding that some core inflation measures could look a bit stronger as well.
Then there’s the Taylor Swift of it all.
“A lot of the pickup in inflation that we’re expecting in November is going to be due to some temporary factors surrounding the arrival of Taylor Swift within Canada,” Grantham said.
He said her concerts, which took place over two weeks in Toronto (the Vancouver performances won’t be captured in this data), affected prices for hotels, restaurants and concert tickets.
“If you get a big enough acceleration in inflation in those areas, it can impact headline numbers,” he said.
Capital Economics is also forecasting a slight uptick in inflation, thanks to the global pop star. It predicts headline inflation for November rose to 2.2 per cent.
“Based on the ‘Taylor Swift effect’ seen on hotel and airfare prices in other developed countries, we judge core services prices rose by 0.7 per cent month-over-month,” said Ruben Gargallo Abarques, assistant economist at Capital Economics.
Volatile aspects of inflation — food and energy — were not affected by Swiftonomics.
And energy prices are expected to remain similar to October on a year-over-year basis, Abarques predicts.
The price of gasoline was the driving factor for overall inflation jumping to two per cent in October, up from 1.6 per cent the previous month.
“Though gasoline prices were largely unchanged in November, that will still result in a seasonally adjusted rise of close to three per cent,” Abarques wrote in a note to clients.
“Together with a jump in natural gas prices in Alberta, energy prices probably rose by three per cent month-over-month — boosting CPI by 0.2 per cent,” Abarques wrote.
RBC economists Nathan Janzen and Claire Fan predict food inflation will likely hold steady year-over-year at around three per cent.
Overall, RBC economists predict inflation edged lower to 1.9 per cent in November.
“Canadian consumer price index growth is expected to have eased slightly in November after picking up in October,” they wrote in a note to clients.
