Canada’s annual inflation rate rose to 2.4 per cent in September, exceeding economists’ forecasts and reinforcing the pressure on the Bank of Canada ahead of its next policy meeting.
Statistics Canada said Tuesday that grocery prices and rental costs were the main drivers of the increase, while gas and travel costs fell at a slower pace than expected. Economists had projected the headline rate to come in at 2.2 per cent.
When excluding gasoline, inflation climbed 2.6 per cent year-over-year. Shoppers paid 4 per cent more for groceries compared with September last year — with fresh vegetables, coffee, beef, and sugary products leading the price gains amid supply shortages.
Rental prices also continued to rise, up 4.8 per cent annually, making shelter the single largest contributor to inflation.
Gasoline prices declined 4.1 per cent year-over-year, a smaller drop than last year’s sharp fall linked to weaker global oil demand. Refinery disruptions in the U.S. and Canada, however, limited the price relief at the pumps.
The cost of travel tours and hotel stays also fell less sharply than usual for this time of year, as major events in the U.S. and Europe drove prices higher.
The September report marks the final inflation reading before the Bank of Canada’s Oct. 29 interest rate meeting. Two of the bank’s preferred core inflation measures remain above 3 per cent, exceeding its 1–3 per cent target range.
“This will make the Bank of Canada’s decision a bit more interesting next week than previously expected,” wrote Douglas Porter, chief economist at BMO. While markets had anticipated a rate cut, BMO said it now expects the central bank to hold steady.
Stephen Brown of Capital Economics noted that the stronger-than-expected inflation and jobs data could delay further rate reductions. “We’re still leaning toward another rate cut,” he said, “but the timing may depend on whether the Bank remains focused on job softness or inflation persistence.”
For Canadians, the latest numbers underline an uncomfortable truth — while inflation has eased from its pandemic peak, essential costs like food, rent, and shelter continue to weigh heavily on household budgets.
