Canada’s inflation eased to 2.2% in October as gas prices fell sharply, though core inflation and key household costs remain stubbornly high.
Canada’s Inflation Slips to 2.2% as Gas Prices Fall
Lower Gas Prices Drive October Slowdown
Canada’s annual inflation rate eased to 2.2 per cent in October, largely due to a sharper drop in gasoline prices, Statistics Canada reported Monday. The decline followed a switch to lower-cost winter fuel blends and falling crude prices linked to concerns about global oversupply.
Headline and Core Numbers Show Mixed Signals
While headline inflation cooled, the rate excluding gasoline held steady at 2.6 per cent — unchanged from September. Economists noted the slowdown relied heavily on cheaper gas and food, with many underlying price categories instead trending upward. BMO chief economist Douglas Porter described the details as “a tad on the disappointing side,” pointing to persistent pressure in several sectors.
Bank of Canada Monitoring Inflation Path
The Bank of Canada signalled in its latest rate announcement that it expects inflation to remain near its two per cent target in the coming months. Governor Tiff Macklem has suggested rates will hold steady provided inflation stays close to the bank’s forecast. Core inflation — which removes volatile components — remained near three per cent but showed modest easing in October.
Grocery Prices Cool but Remain Elevated
Slower growth in gas and grocery prices contributed to the moderation, though food costs continue to rise faster than overall inflation. Prices for processed foods and fresh vegetables increased at a slower pace, but gains in fresh or frozen chicken prices limited relief. Statistics Canada noted grocery inflation has outpaced the headline rate for nine consecutive months.
Rising Household Costs Offset Some Relief
October’s slowdown was tempered by increases in cellphone plan prices, as well as home and auto insurance — with Alberta seeing the largest jumps. Porter cautioned these pressures signal ongoing cost persistence, calling the report “another reason to believe the Bank is moving to the sidelines in December,” with little expectation of further rate cuts.
