Pace of CPI Growth, Core Inflation Picked Up in September

In September, the Consumer Price Index (CPI) rose by 2.4 per cent (y/y). This was higher than August’s 1.9 per cent (y/y) increase.

Key insights

The pace of consumer price growth accelerated in September, particularly due to gasoline price fluctuations. While gas prices were still lower than at the same time last year due to the removal of the carbon tax, this year-over-year difference was less substantial in September than in August. Higher prices for travel tours and food also contributed to the acceleration. Prices for groceries increased by 4.0 per cent (y/y)—a notable jump from 3.5 per cent pace in August. And, while they have been trending down this year, rent prices accelerated in September, rising by 4.8 per cent (y/y).

The Bank of Canada’s preferred measures of core inflation rose by an average of 3.2 per cent in September (y/y)—an increase from the previous month. These measures have hovered around 3.0 per cent for most of this year, suggesting that some underlying inflationary pressure persists. Core figures are growing faster than the headline CPI in part due to their exclusion of gasoline, though their persistence at—and above—the Bank’s upper end of the inflation target range could give the Governing Council pause at their next interest rate-setting decision. Looking ahead, however, the removal of many Canadian retaliatory counter-tariffs on imports from the United States should provide some disinflationary support over the next several months.

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