Higher energy prices drove up inflation in Canada in September, as the Iran and Russia-Ukraine wars continued to strain global refinery capacity.
The Consumer Price Index report, released by Statistics Canada on Monday, showed that overall prices rose 3.1 per cent year-over-year, up from 3 per cent in August.
The bulk of the increases stemmed from higher energy prices , which were 19 per cent higher compared with the same time last year.
Grocery store prices rose 1.7 per cent year over year in September after increasing by 2.8 per cent in August. It marked the smallest yearly increase since May 2024 and the second consecutive month where grocery price growth increased at a slower pace than the overall inflation rate. Prices declined for fresh vegetables as well as sugar and confectionary items, while the price for beef and “other food preparations” grew at a slower pace.
Shelter prices also rose 1.8 per cent year over year.
Monday’s data provided the last look at inflation before the Bank of Canada announces its overnight interest rate later this month.
Higher energy prices have lifted inflation past the Bank of Canada’s two per cent target since May, and the overall inflation rate sat at three per cent in July and August.
The uptick in consumer prices in September also puts more pressure on the Bank of Canada to raise its overnight rate — currently at 2.25 per cent — for the first time in a year.
So far, central bank officials have chosen to look through the direct impact of higher oil prices on inflation and have repeatedly said they’ve seen limited evidence that higher energy costs are spreading broadly to other goods and services.
Core inflation measures, which exclude volatile components such as energy and food prices, continued to remain stable. CPI-median dipped to 1.9 per cent in September from two per cent in August, while CPI-trim fell to 1.8 per cent in September from 1.9 per cent in August.
“With the conflict ongoing, shipments still curtailed, and refinery capacity damage, the risk that inflation broadens and becomes more persistent has gone up,” Bank of Canada governor Tiff Macklem told reporters in a call after an International Monetary Fund meeting in Bangkok on Saturday.
“Our beacon is our two per cent inflation target, and we are committed to keeping inflation close to target over time. We’re prepared to adjust monetary policy as needed.”
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