“The GDP numbers should help to reinforce that interest rates are higher than they need to be to maintain inflation sustainably at a 2% rate,” Nathan Janzen, RBC assistant chief economist, said.

Consumer prices decelerated in November from a year earlier and were flat on the month, after a broad-based decline in the cost of everything from travel tours and mortgage interest to cellphone services and clothing.

The inflation rate was 1.9% last month, versus 3.1% in November 2023 and 2% in October, Statistics Canada said Tuesday from Ottawa. Economists had expected inflation to remain at 2% in November, according to consensus forecasts.

There was a “noticeable boost” on hotel prices from the Taylor Swift concerts in Toronto and Vancouver but the impact on inflation was less than it was in other countries. “Deeper than normal discounting in areas such as furniture and clothing point toward continued weakness in domestic demand that suggest the need for further interest rate cuts in the new year,” Andrew Grantham at CIBC Economics wrote in a research note.

He added policymakers may have a tough time assessing the underlying trend of inflation, given the recent GST holiday that started this month. CIBC predicts a 5 basis point cut from the Bank of Canada at its January meeting.

Grantham highlighted the 3.8% drop in clothing and footwear prices and the 2.2% decline in furniture prices, saying the sharply lower prices for clothing in particular is uncommon and could indicate excess inventory and weak domestic demand.

The central bank, which has already cut interest rates five times this year, for a cumulative 175 basis points to 3.25%. Its next decision is Jan. 29.