Canada’s Inflation Rate Drops to 1.6% in September, Fuel Prices Play Key Role
Canada’s inflation rate fell to 1.6% in September, marking the lowest year-over-year increase to the consumer price index since February 2021, according to Statistics Canada. This decline follows the Bank of Canada’s achievement of its 2% inflation target in August. A significant drop in gasoline prices, which fell by 10.7% over the year, was a major factor in bringing inflation down. Excluding gasoline, the inflation rate remained at 2.2%.
While inflation is cooling, costs for rent and groceries remain elevated, with food prices increasing faster than overall inflation. Seafood, nuts, and fish saw price declines, while beef and eggs became more expensive. Rent prices rose at a slower pace, increasing by 8.2% year-over-year compared to August’s 8.9%.
Analysts believe the drop in inflation could prompt a more aggressive rate cut at the Bank of Canada’s October 23 meeting. So far, the central bank has cut rates three times this year, and the latest inflation figures might lead to a 50 basis point cut, according to market strategists.
The decline offers some relief to consumers, though economists are cautious about the need for an emergency response from the Bank of Canada.