Canada’s annual inflation rate increased to 2.4 percent in September, driven by higher grocery prices and a slower decline in gas and travel tour costs, as reported by Statistics Canada on Tuesday. Economists had anticipated a 2.2 percent figure, but excluding gas, the inflation rate rose to 2.6 percent.
Shoppers experienced a four percent hike in grocery expenses in September compared to the previous year, mainly due to increased prices of fresh vegetables and sugary items. Statistics Canada noted a consistent upward trend in grocery inflation since April 2024, with items like fresh and frozen beef and coffee contributing to the surge due to limited supply.
Rental costs also played a significant role in pushing inflation up, rising to 4.8 percent year-over-year. Shelter expenses constitute the largest component of the inflation index. Gas prices saw a milder decline of 4.1 percent compared to the previous year, attributed to refinery disruptions in the U.S. and Canada that led to increased petrol costs.
Travel tour prices declined at a slower pace in September compared to the previous year, with a 4.6 percent increase from August, influenced by major events in the U.S. and Europe that drove up hotel prices. The latest inflation report precedes the Bank of Canada’s upcoming interest rate meeting on Oct. 29.
Despite inflation hovering within the bank’s target range of one to three percent, it currently exceeds the midpoint of this range. The Bank of Canada typically focuses on core inflation measures that exclude volatile sectors like gas, with some indicators surpassing the three percent mark. This may impact the bank’s decision on future interest rates, with analysts divided on the likelihood of a rate cut at the upcoming meeting.
