Canada’s inflation rate dropped to 1.6% in September, down from the 2% target achieved in August, according to Statistics Canada. This marks the smallest year-over-year increase in the consumer price index since February 2021.
The decline was largely driven by a 10.7% decrease in gasoline prices over the past year. Excluding gasoline, the all-items inflation rate remained steady at 2.2%, matching August’s rate.
Despite the cooling inflation, certain costs—such as rent and groceries—remain high. Food prices, for the second consecutive month, increased faster than the overall inflation rate. While seafood, nuts, seeds, and fish saw price declines, costs rose for items like fresh and frozen beef and eggs.
Rent prices, while still increasing, grew at a slower pace in September, rising 8.2% compared to 8.9% in August. This slowdown was particularly noticeable in Newfoundland and Labrador, New Brunswick, and British Columbia.
With the inflation rate lower than expected, some analysts suggest that the Bank of Canada might consider a 50-basis point rate cut in its upcoming meeting on October 23. Karl Schamotta, chief market strategist at Corpay, noted that while an emergency-scale response may not be necessary, the latest inflation data could reduce risks associated with a more aggressive rate cut.
