Inflation hits 3.1% in September as gas prices jump 27.8%

Canada’s annual inflation rate rose to 3.1 per cent in September from 3.0 per cent in August, driven by gasoline prices that were 27.8 per cent higher than a year earlier, Statistics Canada said Monday.

The agency’s consumer price index release showed the reading came in just under the 3.2 per cent that economists had expected, according to Global News. Prices rose 0.1 per cent from August before seasonal adjustment and 0.4 per cent on a seasonally adjusted basis.

Gasoline was the main reason for the pickup. The year-over-year increase accelerated from 22.8 per cent in August, even as retailers switched to a cheaper winter blend. Excluding gasoline, the consumer price index rose 2.2 per cent, down from 2.4 per cent in August.

Fuel oil and other fuels jumped 57.8 per cent, which pushed inflation above 5 per cent in all three Maritime provinces, where heating oil is widely used, Global News reported. Ontario had the lowest rate at 2.5 per cent. Airfares rose 19.4 per cent because of higher jet fuel costs, the outlet said.

Grocery prices rose 1.7 per cent from a year earlier, down from 2.8 per cent in August and the smallest annual increase since May 2024, according to Statistics Canada. Shelter costs rose 1.8 per cent, up from 1.5 per cent. Rent climbed 2.8 per cent, unchanged from August, while mortgage interest costs fell 0.2 per cent.

The Bank of Canada’s preferred core measures eased. CPI-trim slipped to 1.8 per cent from 1.9 per cent, and CPI-median to 1.9 per cent from 2.0 per cent, Global News reported.

Douglas Porter, chief economist at BMO, said core measures holding near two per cent suggest the price increases are not spreading beyond gasoline. He said the report on its own “does nothing to advance the case for interest rate hikes.”

Andrew Grantham of CIBC Capital Markets said the data suggest there is little rush and policymakers can take more time before raising rates.

Bank of Canada Governor Tiff Macklem has said high energy prices are lifting the central bank’s inflation outlook. “You can only release strategic energy, oil reserves so many times, but that has helped contain this energy price shock,” he said.

The central bank’s next interest rate decision is Oct. 28. Most economists expect it to hold its key rate, as we reported earlier this month, although bond markets have shifted toward pricing in a possible hike, according to The Globe and Mail.

For more on the central bank’s thinking, see our report on Macklem’s comments on energy prices and the inflation outlook. Higher yields are also feeding into household costs, with C.D. Howe warning that mortgage renewals will get costlier.

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Sources: Statistics Canada, The Daily, Oct. 19, 2026; via Global News.