Canada Inflation Rises to 3.1 Per Cent in September as Energy Costs Surge
Canada’s annual inflation rate rose to 3.1 per cent in September, driven higher by accelerating gasoline prices stemming from ongoing conflict in the Middle East, cbc.ca reported. The consumer price index ticked up from a flat 3.0 per cent reading that held through July and August. Statistics Canada noted that while the shift to less expensive winter gasoline blends offered some month-over-month relief, pump prices still jumped 27.8 per cent compared to the same period a year earlier.
The national statistics agency reported that benchmark crude oil prices reached their highest level since May due to persistent geopolitical tensions. Fuel oil and other home heating fuels experienced an even sharper increase, surging 57.8 per cent year-over-year. That jump hit consumers in Atlantic Canada particularly hard, where many households rely on heating oil during colder months. Excluding gasoline entirely, the broader consumer price index increased 2.2 per cent annually in September.
Grocery and Shelter Price Pressures Diverge Across the Country
While energy costs accelerated, food inflation continued to cool. Grocery prices rose 1.7 per cent year-over-year in September, marking the smallest annual increase since May 2024. Statistics Canada attributed the moderation to cheaper fresh vegetables, which dropped 2.9 per cent, alongside a decline in sugar and confectionery items. Beef prices also decelerated, rising 8.7 per cent compared to an 11 per cent increase in August. Despite this recent slowdown, the agency emphasized that overall grocery prices remain 33.0 per cent higher than they were in September 2020.
Shelter inflation moved in the opposite direction, rising 1.8 per cent year-over-year in September, up from 1.5 per cent in August. Homeowners faced faster increases in mortgage insurance, which climbed 4.9 per cent, alongside a 1.2 per cent rise in home maintenance and repair costs. Airfares also registered a steep climb, surging 19.4 per cent as one of the consumer categories most directly exposed to rising jet fuel and energy costs.
Bank of Canada Warns of Higher Inflation Outlook Ahead of October Rate Decision
The September inflation report serves as the final set of domestic price data for the Bank of Canada before its scheduled interest rate decision and monetary policy report on October 28. Speaking at a press conference on the sidelines of International Monetary Fund meetings in Bangkok, Bank of Canada Governor Tiff Macklem warned that persistently high global energy prices are placing global economic resilience “under strain.” Macklem stated that the central bank expects its upcoming quarterly inflation forecast to be significantly higher than its previous projection in July, which anticipated inflation cooling to around 2.5 per cent in the second half of the year.
“With the conflict ongoing, shipments still curtailed and refinery capacity damage, the risk that inflation broadens and becomes more persistent has gone up,” Macklem told journalists on a conference call reported by Reuters. Macklem added that strategic oil reserves have been heavily depleted to cushion past shocks, leaving fewer buffers against ongoing supply disruptions in the Middle East. While money market expectations have priced in potential rate increases over the course of next year, financial markets did not immediately price in a policy rate change for the October 28 announcement.
Frequently Asked Questions About Canadian Inflation
How did core inflation measures perform in September?
Statistics Canada reported that its core inflation measures, which strip out volatile components like food and energy, eased slightly on a monthly basis. The Bank of Canada’s closely watched CPI-trim metric stood at 1.8 per cent year-over-year, while the CPI-median measure came in at 1.9 per cent annually.
What specific food categories drove the slowdown in grocery prices?
The deceleration in food inflation was primarily led by a 2.9 per cent year-over-year drop in fresh vegetables. Declines in the sugar and confectionery category, alongside a slower pace of price growth for beef at 8.7 per cent, also contributed to the moderation.
When will the Bank of Canada release its next official economic forecast?
The Bank of Canada will release its updated economic and inflation forecasts alongside its next interest rate decision on October 28.
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