By Paul Vieira

OTTAWA -- Canada's budget deficit widened in October from the same year-ago month, as a surge in benefits paid to seniors and the unemployed offset a broad-based gain in tax revenue.

Canada posted an October deficit of 1.53 billion Canadian dollars ($1.13 billion), compared with a C$940 million deficit a year earlier, the Finance Department's monthly fiscal monitor publication said Friday. October's budget shortfall is the smallest in four months, and down from C$2.37 billion in the previous month.

Public-finance data for the first seven months of the 2016-17 fiscal year indicate Canada is running a deficit of C$9.34 billion compared with a surplus of C$635 billion in the same year-ago period.

The Canadian government anticipates a C$25.1 billion budget shortfall for the 2016-17 fiscal year, or 1.2% of gross domestic product. Amid a slow-growth outlook, the Liberal government -- which came to power in the fall of last year -- has ramped up infrastructure spending and offered tax breaks to households with children to help fuel growth. The Bank of Canada forecasts GDP expansion in 2016 of a tepid 1.1%, and 2% next year.

To date, economists say the stimulus spending has had mixed results in terms of lifting output. Recent figures measuring retail sales suggest households that benefited from the new tax breaks are beginning to open their wallets and spend, with receipts up solidly in September and October.

Government revenue in October rose 11.3% to C$24.48 billion, with robust gains in personal-tax, corporate-tax and sales-tax receipts. This marked the first month-over-month advance in revenue since June. For the April-to-September period, revenue edged upward by 0.4% to C$163.92 billion.

On the expense side, outlays related to government programs increased 15% in October to C$24.01 billion, and 8.2% over the seven-month period. The pop in outlays in October, the Finance Department said, was tied to a nearly 7% jump in benefits paid to seniors as aging workers opt for retirement. Also, it added, the amount of benefits paid to seniors rose as payments are indexed to inflation.

There was also a 25% increase in jobless benefits. Figures from Statistics Canada earlier this week indicated a 5.8% rise in October from the year-ago period in people qualifying for jobless benefits.

Offsetting the increased costs in October was a 3.1% decline in public-debt charges, to C$2.00 billion, reflecting the relatively low-rate environment.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

December 23, 2016 11:15 ET (16:15 GMT)

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