The Globe and Mail reports in its Wednesday edition that Canada's inflation rate rose unexpectedly in October, making big interest rate cuts by the Bank of Canada less likely next month. The Globe's Matt Lundy writes that the Consumer Price Index increased to an annual rate of 2 per cent, up from 1.6 per cent in September, surpassing expectations of 1.9 per cent. This rise was mainly driven by higher gasoline prices and increased property taxes. Although the CPI rose by 0.4 per cent monthly, the BOC is still expected to lower interest rates to boost the economy and keep inflation near its 2-per-cent target. Tuesday's report, however, also showed that core measures of inflation heated up last month, an unwelcome development. This could prompt the BOC to shift back to rate cuts of a quarter-percentage-point after its half-point reduction in October. TD economist James Orlando says: "The BOC is likely to view today's data release as a minor setback. Inflation had become a back ground worry, and while it isn't raising any red flags yet, today's data is a reminder that getting price growth to settle at 2 per cent will take time." Mr. Orlando expects the BOC to cut rates by 25 basis points at its next decision on Dec. 11.