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    In November, Canada’s industrial product price increased by 0.9%, surpassing expectations of 0.3%

    by VT Markets
    /
    Dec 22, 2025
    In November, Canada’s Industrial Product Price Index increased by 0.9%, which is much higher than the expected rise of 0.3%. This data shows that industrial prices have surged more than anticipated during this time. This price jump indicates strong activity in the industrial sector, which could affect various parts of the economy. The unexpected rise in the price index might influence economic strategies in the future.

    Ongoing Inflation at Producer Level

    The November price data, being three times higher than expected, clearly signals ongoing inflation at the producer level. This goes against the market’s earlier belief that the Bank of Canada would likely start cutting interest rates in the first half of 2026. The data indicates that the cost pressures manufacturers face are not easing quickly. We need to rethink our expectations for short-term interest rates, as the chance of a rate cut in the first quarter has significantly decreased. Overnight Index Swaps, which track market interest rate expectations, show that nearly 20 basis points of easing expected by April 2026 have been removed. Consequently, strategies that bet against quick rate cuts, such as selling futures contracts on Canadian government bonds, should be revisited. This unexpected inflation also positively affects the Canadian dollar. Higher expected interest rates usually strengthen a currency, and we have recently seen the USD/CAD exchange rate drop below 1.3500 after this news. With oil prices remaining steady, as WCS holds above $82, further strength in the loonie is likely.

    Impact on Consumer Inflation

    Looking back to the post-pandemic period in 2021, rising producer prices served as an early warning sign for a rise in consumer inflation. This calls for caution, as the upcoming Consumer Price Index report for December will be closely monitored to determine if these costs are being passed along to consumers. For now, we should consider this IPPI data as a reason to prepare for a more aggressive central bank than we previously expected. Create your live VT Markets account and start trading now.

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