Canada’s annual inflation rate rose to 3.1% in September, data showed today, as higher gasoline and diesel prices pushed the consumer price index above the Bank of Canada’s upper limit once again after three months.
Analysts polled by Reuters had forecast inflation of 3.2% in September, up from 3% in August.
The September inflation figure is the last CPI data beforethe Bank of Canada’s monetary policy decision later this month.
On a month-on-month basis, CPI rose by 0.1% in September from a drop of 0.1% in August, Statistics Canada said.
Bank of Canada Governor Tiff Macklem has said that new forecasts that will be released alongside the rates decision will show higher inflation in Canada.
The higher CPI was largely driven by a 19% rise in energy prices on an annual basis, following a 15.4% rise in August. This led to an increase in gasoline costs of 27.8% year on year.
Excluding the impact of higher gasoline prices, annual inflation was 2.2% in September, down from 2.4% in August.
Today’s figures show that grocery prices continued to rise at a slower pace, with food purchased at stores rising by 1.7% year-on-year in September. This was the smallest yearly increase since May 2024, StatsCan said.
Shelter prices increased in September, rising by 1.8% annually after an increase of 1.5% in August. Rents increased by 2.8% in September.
Air transportation rose by 19.4%. The year-on-year increase in travel tours was slower than the previous month.
Money markets are betting the Bank of Canada will hold its rate at 2.25% on October 28, although they are pricing in a 25-basis-point hike in December.
“Given the recent slowdown in the economy, the Bank of Canada may still be able to argue that inflation will return to target without raising rates this month,” said Royce Mendes, managing director at Desjardins.
