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Canadian annual inflation held steady at 2.9 percent and core inflation was at 2.1 percent in November, with the core number slightly undershooting forecasts, according to Statistics Canada data released on Tuesday.
The data caused a brief dip in the Canadian dollar but it quickly recovered as analysts reckoned that the Bank of Canada was likely to stay on the sidelines for some time to come.
Both the overall consumer price index and the core index, which strips out volatile items, rose a modest 0.1 percent on the month.
The overall numbers matched the median predictions in a Reuters survey. Analysts had, however, expected core inflation of 2.2 percent on the year and 0.2 percent on the month, in each case 0.1 point more than the actual result.
"We saw the dollar weaken slightly in the aftermath of the report, since core was a little bit light," BMO Capital Markets deputy chief economist Doug Porter commented.
"But the fact is core is still above the bank's (2 percent) target, and it looks as if core inflation is running above what they forecast for the fourth-quarter, so I'd hardly say this is an excuse for the bank to ease."
In October the central bank predicted 2.7 percent total inflation and 2.0 percent core inflation for the fourth quarter. On December 6 it extended a freeze on its overnight rate at 1 percent for a 15th straight month as it voiced concern over Europe.
Falling gasoline prices in November tempered Canada's inflation data, though they were still 13.5 percent higher than a year earlier. Food prices continued to put upward pressure on the index, up 4.8 percent on the year and 0.9 percent on the month. On a seasonally adjusted basis, however, food was only up 0.2 percent from October.
Overnight index swaps, which trade based on expectations for the central bank's key policy rate, showed that traders very slightly scaled back bets on a rate cut in 2012.
"People might think the Bank of Canada is going to cut at some point in 2012. I don't think that's the case. The Bank of Canada is going to be on hold for the forseeable future," said David Bradley, director of foreign exchange trading at Scotia Capital.
"I think that over time the Canadian dollar should continue to slowly appreciate, if not against the U.S. then against some of the crosses, against the euro, etc."
U.S. inflation, by comparison, was 3.4 percent in November.