Statistics Canada reports that the annual inflation rate eased further in September, helped largely by lower gasoline prices than a year earlier.
On Tuesday, the agency released its consumer price index (CPI) for September, showing a year-over-year increase of 1.6%, down from 2.0% in August. This marks the slowest annual inflation pace since February 2021, when the CPI rose 1.1%.
Gasoline prices were a key factor in the slowdown: pump prices in September were 10.7% lower than they were a year ago. Excluding gasoline, overall inflation ran at 2.2% on an annual basis in September.
Rent increases moderated slightly but remained high. Shelter costs continued to be a major driver of inflation, with rent rising 8.2% year over year in September, compared with an 8.9% gain in August. While the rate of increase has slowed modestly, rents are still contributing significantly to the headline CPI.
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Grocery prices rose faster than headline inflation, driven by meat and staples
Statistics Canada also reported that food bought from grocery stores increased 2.4% in September compared with the same month a year earlier, the same annual pace recorded in August. Within grocery spending, prices for fresh and frozen beef climbed 9.2%, edible fats and oils rose 7.8%, and eggs went up 5.0%.
Food services continued to see price pressure as well: prices for meals purchased at restaurants rose 3.5% year over year in September, slightly higher than the 3.4% increase seen in August.
This CPI report is the final major economic release before the Bank of Canada meets on Oct. 23 to review interest rates. With inflation trending closer to the central bank’s 2% target, monetary policy decisions hinge on upcoming data and the bank’s ongoing assessment of the economy.
So far this year, the Bank of Canada has reduced its key policy rate three times, bringing it to 4.25%. Governor Tiff Macklem has indicated that further rate cuts are plausible given the improvement in inflation, but the timing and size of any additional reductions will depend on how future economic indicators evolve.
What is the CPI?
The Consumer Price Index (CPI) is Statistics Canada’s official gauge of changes in the prices consumers pay for a basket of goods and services. Because prices generally rise over time, the CPI is commonly used to measure inflation and assess the cost of living.
For a concise explanation, see the MoneySense glossary entry on the CPI.
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