‘Data for Business’ is an effort of the Langley Chamber, in partnership with the Canadian Chamber’s Business Data Lab, to bring our members reports, stats, and analysis on economic and business data to help inform business and investment decisions. Read our latest update below:

Canada’s inflation rate climbed to 3.1% in September, driven largely by continued pressure from gasoline and other energy costs. British Columbia came in slightly below the national rate at 3.0%, the second-lowest provincial reading after Ontario.

While the headline number remains elevated, there were some more encouraging signs underneath it: core inflation measures continued to ease and grocery inflation slowed. With higher energy costs and new trade pressures still adding uncertainty, the Bank of Canada is expected to remain cautious as it weighs persistent inflation against a softer economic outlook ahead of its October 28 interest rate decision.

Key Takeaways
· Canadian inflation rose 3.1% in September, marking the fourth reading at or above 3% in five months. Prices increased 0.1% on a monthly basis, or 0.4% after adjusting for seasonality. The acceleration was once again driven by higher gasoline prices, while travel tours and groceries provided some relief.
· Despite the hot headline reading, underlying inflation has improved. Inflation excluding gasoline rose 2.2%, down from August’s 2.4%. The Bank of Canada’s core measures also improved averaging 1.9%. Some monthly price pressures are showing momentum of roughly 2.6%, suggesting the weakness of core inflation could soon reverse.
· The energy shock remains a persistent challenge. Gasoline prices rose 28% in September compared with a 23% year-over-year increase in August. Fuel oil has outpaced all other transport energy price categories, accelerating 58% in September, impacting Atlantic Canada inflation. The impacts from the conflict are lasting much longer than previously thought.
· Grocery inflation slowed to 1.7% in September, but price levels remain quite high. Slower price growth for fresh vegetables, sugar and frozen beef prices helped drive the improvement.

Interest Rate Implications:
Inflation remains above the path forecasted by the Bank of Canada’s July Monetary Policy Report, which was projected to average 2.5% in the third quarter. There is little evidence of a broader inflation problem, but firms are signaling that they see higher costs emerging and that will be passed onto consumers. This comes as new U.S. tariffs were added in September and a stalemate in Canada-U.S. trade negotiations.

The longer these energy prices remain elevated, the quicker the Bank will opt out of this wait and see mode. Encouragingly, core inflation measure has been well-anchored around the 2% target. The Bank’s updated forecast to be released alongside their October 28 decision will show how they view the competing forces of higher inflation and weak growth panning out. For now, we anticipate the Bank to keep holding rates at their next meeting.

Commentary:
“Higher gasoline prices have stirred the inflation genie, but so far, those pressures haven’t spread more broadly. Still, inflation is moving in the wrong direction, leaving the Bank of Canada facing a dilemma. Four of the last five readings have been at or above 3%, nearly half a percentage point above the Bank’s July forecast for the third quarter. Yet core inflation remains close to the 2% target, and there’s still plenty of slack in the labour market. It’s hard to see where sustained inflation pressure would come from in an economy that still faces headwinds.

Despite Governor Macklem’s tougher tone in recent speeches, we expect the Bank to hold rates at its next meeting. That gives the Bank room to wait and see how the outlook unfolds, albeit with growing discomfort.” - Andrew DiCapua, Principal Economist, Canadian Chamber of Commerce.