Wednesday, October 22, 2025

Canadian Inflation Cools to 1.6% in September, Lowest Since 2021

Canada’s annual inflation rate decelerated to 1.6% in September, down from 2.0% in August, marking the slowest pace of price growth since February 2021, Statistics Canada reported on Tuesday. The cooling inflation was primarily driven by a sharp decline in gasoline prices.

The Consumer Price Index (CPI) fell 0.4% on a monthly basis in September, following a 0.2% drop in August. Gasoline prices plummeted 7.1% month-over-month and were down 10.7% compared to a year ago, reflecting lower crude oil prices amid concerns over weakening economic growth.

Despite the overall slowdown, Canadians continue to face elevated prices for essential goods and services. Food purchased from stores rose 2.4% year-over-year in September, matching August’s increase and outpacing headline inflation for the second consecutive month. Prices for items like fresh beef (+9.2%), edible fats and oils (+7.8%), and eggs (+5.0%) remained notably high.

Housing costs also continued to pressure consumers, with rent prices up 8.2% annually in September, though this marked a slight moderation from August’s 8.9% increase. Compared to September 2021, overall consumer prices have surged 12.7%, with rent and grocery costs up 21.0% and 20.7% respectively over the three-year period.

The Bank of Canada, which targets 2% inflation, will closely scrutinize this data ahead of its next interest rate decision on October 25. While the central bank has held its key rate steady at 5% in recent meetings, the persistent strength in core inflation measures may influence its future policy stance.

Regionally, price growth slowed across all provinces in September, with transportation and housing costs being key factors in the national trend.


Information for this story was found via StatCan and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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