Gasoline prices continue to decline year on year, mainly due to the elimination of the carbon price for consumers, although prices at the pump increased modestly on a monthly basis. With gas prices falling less year-on-year in September than in August, StatCan said this added some fuel to inflation numbers.
Food, rent and travel costs are rising again
Consumers are now confronted with persistent pressure in the supermarket. Fresh vegetable prices rose 1.9% annually in September, after falling in August, and sugar and confectionery costs also accelerated to a 9.2% increase, compared with 5.8% the month before. StatCan noted that annual grocery price increases have been largely higher since the recent low in April 2024. Beef shortages and coffee are persistent factors driving higher prices, the agency said.
Travel tours also saw a rare month-over-month price increase in September, as the agency pointed to higher costs for hotels associated with major events in Europe and some parts of the United States.
National rents rose in September from 4.5% in August to 4.8% on an annual basis. Renters have generally seen price increases slow over the past year, with some monthly volatility at times.
Last month’s inflation figures were somewhat influenced by smaller annual increases in clothing and shoe prices.
Inflation figures add uncertainty to the BoC’s decision
The September inflation report will be the Bank of Canada’s last look at price data before the central bank’s next interest rate decision on Oct. 29. The central bank cut its benchmark interest rate by a quarter point to 2.5% in its last decision in September. The central bank’s preferred measures of core inflation showed some stubbornness in September, remaining above 3%.
The Bank of Canada looks at these numbers in an attempt to eliminate volatile influences on headline inflation rates, but monetary policymakers have recently expressed some doubt about the reliability of these numbers.
CIBC senior economist Andrew Grantham said in a note to clients on Tuesday morning that, looking at a broader range of core inflation measures, underlying price pressures in September appeared broadly in line with August figures. Grantham argued that meant there was less inflationary pressure to worry about than the headline figure would suggest, leading the Bank of Canada to expect a quarter-point cut when it makes its decision next week.
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Stephen Brown, deputy chief North America economist at Capital Economics, said in a note to clients that the latest inflation data, combined with the stronger-than-expected jobs report for September, should temper expectations for rate cuts before the end of the month. But he said Capital Economics is “still leaning towards another rate cut” following comments from Bank of Canada Governor Tiff Macklem last week raising concerns about a weak labor market.
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