Canada updates consumer price index inflation for October on Tuesday and it's the last inflation reading before the Bank of Canada's next policy decision on Dec. 11, noted Scotiabank.

There is, however, other data that is at least as important --arguably more so -- between now and then such that decisions like the size of the likely cut won't just be informed by CPI, said the bank.

Scotiabank went with 0.4% month-over-month seasonally unadjusted (NSA) for headline CPI which would translate into a seasonally adjusted rise of 0.3% month over month. That would translate into a year-over-year reading of 2% in a bounce back from 1.6% the prior month. If nothing changed other than year-ago base effects, then inflation would otherwise land at 1.6% but it's the upside from prices in October that would lift the annual rate.

Gasoline isn't expected to play a significant role as NSA prices were little changed in October over September, stated the bank. Food prices are also not expected to be a material influence. But October is a reliable up-month for many NSA prices including shelter components like property taxes, communications, household operations and furnishings, clothing and footwear, and transportation via vehicle prices.

On top of up-months for NSA prices is the traction in builder prices. Prices are rising as the rent-versus-own dynamic is shifting in favor of owning given surging rent, while tight supply in new and resale markets, rising input costs including so far only limited relief in financing costs, and an embarrassment of riches being thrown at builders are also supportive of pricing power, pointed out Scotiabank.

Rent is a bit of a wildcard with about a 7% basket weight. Market measures have been sharply slowing, but that doesn't offer assurance that they will translate into rent within CPI which is significant because of methodological differences.

One reason is that Statistics Canada makes hedonic model adjustments that reflect how dwelling characteristics may have changed, added the bank. Another reason is that StatsCan includes new rents, existing tenants rents as they are rolled over, and existing tenants rents that are in the middle of their lease which delays CPI-rent's adjustments to market changes.

Key, however, is going to be the Bank of Canada's preferred core inflation measures called trimmed-mean CPI and weighted median CPI. They ebbed over recent reports. This trend may persist along a volatile path given the ongoing slack in the economy, but the month-to-month gyrations are nearly impossible to predict.

Weighted median CPI mont-over-month seasonally adjusted annual rate (SAAR) is the change in the 50th percentile price in the basket after ranking weighted contributions from highest to lowest and is extremely sensitive to small differences in the composition of the basket that are largely unavailable. Trimmed mean CPI lops off the top and bottom 20% of the CPI basket after doing the same ordering and is also difficult to estimate given the few price signals economists have to go by in advance, according to Scotiabank.