Canada’s annual inflation rate increased to 3.1% in September, driven by a surge in gasoline prices due to the ongoing conflict in the Middle East. Statistics Canada reported that the shift to cheaper winter gasoline blends offered some relief last month, although pump prices soared by 27.8% year-over-year, following a 22.8% rise in August. The agency noted that the continued turmoil in the Middle East pushed benchmark oil prices to their highest level since May.
Additionally, grocery prices rose by 1.7% year over year in September, a decrease from the 2.8% uptick in August. This marks the smallest yearly increase since May 2024. The decrease in food inflation was attributed to lower prices of fresh vegetables and a decline in the “sugar and confectionary” category. Despite the slowdown in grocery prices compared to last year, prices have still surged by 33.0% since September 2020.
Shelter prices also saw an increase, rising by 1.8% year over year in September, up from 1.5% in August. Statistics Canada’s core inflation indicators showed a slight easing on a monthly basis in September. These measures, which exclude extreme price fluctuations, are closely monitored by the Bank of Canada.
Bank of Canada Governor Tiff Macklem has cautioned that the persistent high global energy prices resulting from the Middle East conflict could impact the central bank’s inflation forecast ahead of its upcoming rate announcement on October 28. A recent Bloomberg survey of 12 economists predicted a 3.18% year-over-year increase in the September consumer price index. The national inflation rate remained unchanged at three percent in August, according to a previous report.