Canada’s annual inflation rate rose to 2.4 per cent in September, surpassing economists’ expectations of 2.2 per cent, as grocery prices continued to climb and gas and travel costs declined at a slower pace, Statistics Canada reported Tuesday.
Excluding gasoline, the inflation rate increased to 2.6 per cent, underscoring broader price pressures across the economy. Shoppers faced a 4 per cent increase in grocery bills compared with the same month last year, driven primarily by higher costs for fresh vegetables, sugary goods, fresh and frozen beef, and coffee. Limited supply has contributed to the rising prices of these items.
Rental prices also remained elevated, rising 4.8 per cent year-over-year. Shelter costs remain the largest component of the inflation basket, adding persistent upward pressure on overall consumer prices.
Gasoline prices fell at a slower pace, declining 4.1 per cent compared to September 2024. Last year, fuel prices dropped due to reduced crude oil costs amid concerns about slower economic growth in the U.S. and China. This September, refinery disruptions in both Canada and the U.S. pushed gasoline prices higher.
Travel tour costs followed a similar trend, with prices decreasing more slowly than last year. Instead of the typical seasonal decline, travel costs rose to 4.6 per cent from August, influenced by major events in the U.S. and Europe that drove up hotel rates.
The September inflation data will inform the Bank of Canada ahead of its interest rate decision on October 29. The central bank focuses on core inflation measures that exclude volatile sectors like fuel. Two of these measures remain above 3 per cent, exceeding the bank’s target range.
Douglas Porter, chief economist at Bank of Montreal, noted in a client briefing that the latest figures make the upcoming rate decision “more interesting than previously expected,” as markets had largely anticipated a rate cut. BMO does not expect another cut next week, citing persistent inflation pressures.
