Canada’s annual inflation rate rose 2.4% in September, compared with a 1.9% increase in August, driven in part by rising food costs and a slower decline in gasoline prices, Statistics Canada’s consumer price index (CPI) showed Tuesday.
The reading came in slightly above economists’ expectations of 2.2%, suggesting continued price pressure in key consumer categories.
Food prices led the gains, with grocery bills rising 4% year-over-year, up from a 3.5% gain in August. Consumers paid more for fresh vegetables (+1.9% compared with -2% in August) and sugar and confectionery (+9.2% compared with +5.8%), while items like fresh or frozen beef and coffee saw increases due in part to lower supply. Grocery inflation has been trending upward since April, when it hit a low of 1.4%, StatsCan said.
Gasoline prices fell 4.1% year-over-year in September, a smaller decline than August’s 12.7% drop. The slower decrease was largely attributed to a “base-year effect,” as gas prices had plunged in September 2024 amid weaker global oil demand. This year, however, refinery maintenance and supply disruptions in both Canada and the U.S. pushed prices up 1.9% month-over-month.
Excluding gasoline, the CPI rose 2.6% on an annual basis, compared with 2.4% in August. On a monthly basis, the CPI rose 0.1% in September, or 0.4% when seasonally adjusted, indicating that price pressures are broadening slightly.
The Bank of Canada’s core inflation measure, which excludes food and energy, increased 2.8% year-over-year and 0.2% month-over-month, suggesting that underlying inflation remains sticky even as headline figures hover near the central bank’s 2% target.
The Bank of Canada will make its next interest rate announcement on Oct. 29, with today’s inflation data making the bank’s decision less certain.
The bank cut its key overnight rate by 25 basis point to 2.5% in September, with most analysts and economists initially projecting a further reduction in October.
