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September saw Canada’s Consumer Price Index (CPI) rise 1.6%, the slowest year-over-year increase since February 2021.

This is also 0.4% lower than August and has primarily been due to a significant decline in gasoline prices.

These figures are significant as they will have an impact on the Bank of Canada’s interest rate announcement, scheduled for October 23, 2024. The main takeaways of today’s Statistics Canada figures include:

🔘  A major decline in gasoline prices (-10.7% year-over-year) which lowers transportation costs for many goods and services;

🔘  Stubborn housing costs, as rent (+8.2%) and overall shelter costs (+5.0%) remain a challenge for Canadians;

🔘  Although rental prices slowed the most in Newfoundland and Labrador (+5.1%), New Brunswick (+10.1%) and British Columbia (+7.3%), they have a significant impact on the cost of living;

🔘  Grocery prices continue their growth at +2.8% compared to August’s +2.7%; and

🔘  Health and personal care costs rose higher in September than August (+3.1% vs. +2.6%).

Following the US Federal Reserve’s jumbo 0.5% rate reduction last month, many will be speculating on the Bank of Canada’s decision next week. With inflation trending below the 2% target for the first time in more than three years, current monetary policy may be seen as too constricting on the economy.

It is important to note that the Bank of Canada’s preferred measures of Core Inflation (CPI trim and CPI median) remain unchanged compared to August’s data (2.4% and 2.3% respectively). Both measures aim to filter out short-term volatility and offer a more accurate representation of persistent inflationary pressures. The Bank of Canada leans more towards these metrics to guide monetary policy decisions.