- Nom du rédacteur
- LJ Valencia
Economist
Economic News
Canada: Inflation Edged Up in September on Soaring Energy Prices
October 19, 2026
Highlights
- Headline CPI rose 3.1% y/y in September, following a 3.0% print in August. This was slightly below the consensus expectation of economists (3.2%). Prices edged up 0.1% month over month and increased 0.4% m/m after adjusting for seasonal effects. Table 1 summarizes the key data points.
Comments
The conflict in the Middle East caused inflation to accelerate in September, with crude oil prices reaching their highest level since May. As a result, prices at the pump rose at 27.8% y/y from September 2025 levels, above the 22.8% pace in August. Aggregate energy prices increased by 19.0% in September from 15.4% in the prior month, inching closer to the 22.2% rate seen in May.
Excluding gasoline prices, inflation decelerated in September to 2.2% y/y from 2.4% in August. Shelter prices ticked up to 1.8% y/y compared to 1.5% in August, largely driven by fuel oil and other fuels which advanced by 57.8%. Other contributors to accelerating shelter prices were homeowners’ home and mortgage insurance (4.9%) and maintenance and repairs (1.2%). Offsetting these increases were a continued pullback in homeowners' replacement cost (-1.9%) and mortgage interest cost (-0.2%). In addition, students saw tuition fees rise by 2.4% in September 2026, up from 1.7% the same month last year. That said, grocery price growth puts a positive contrast to today’s inflation print, slowing down to 1.7% in September from 2.8% in August (graph 2). This was the smallest increase since May 2024 (1.5%) and the second consecutive month where grocery prices rose at a slower pace than headline CPI. The slowdown was largely driven by lower prices of fresh vegetables (-2.9%) and sugar and confectionery (-2.7%).
Turning to underlying inflation, the average of the Bank of Canada’s preferred measures of core inflation—CPI median and trimmed mean—rose at a more modest year-over-year pace (1.9% y/y) compared to the previous month (2.0%). In contrast, their annualized seasonally adjusted 3-month moving average increased from 2.3% in August to 2.6% last month (graph 3). Overall, the measures suggest that underlying inflation remains contained but modest upward pressures persist.
Implications
Although underlying inflation appeared contained in September, elevated energy prices continued to drive much of the near-term movements in headline inflation. At the same time, back-to-back months of job losses External link. and subdued housing markets External link. point to slowing economic momentum. And as stated in our research External link., renewed US tariffs are likely to dampen economic growth for the rest of the year while Canadian retaliatory tariffs introduced on September 8 could add further to inflationary pressures. Given this context and rising inflation expectations in the Bank of Canada’s business and consumer surveys, we now expect the Bank to hike rates in the upcoming October 2026 announcement.