Canada’s Inflation Rises Slightly, Keeping Pressure on the Bank of Canada

Canada’s Consumer Price Index (CPI) edged higher in September, signaling a modest uptick in inflation and complicating the outlook for future monetary policy decisions by the Bank of Canada (BoC).

According to Statistics Canada, the CPI rose 2.4% year-on-year, accelerating from 1.9% in August and slightly exceeding market expectations. On a monthly basis, consumer prices gained 0.1%, reflecting modest price growth across key categories such as housing, transportation, and services.

Core Inflation Remains Firm

The BoC’s core CPI measure, which excludes volatile items like food and energy, rose 2.8% year-over-year and 0.2% month-on-month, suggesting that underlying inflationary pressures remain resilient despite slower overall economic momentum.

Among the BoC’s preferred inflation gauges:

• The Common CPI increased 2.7%,
• The Trimmed CPI rose 3.1%, and
• The Median CPI climbed 3.2%.

These indicators, which help filter out temporary price swings, highlight that underlying inflation remains above the BoC’s 2% target, reinforcing expectations that the central bank may adopt a cautious stance before considering interest rate cuts.