Annual inflation falls to 1.6% in September, smallest yearly increase since 2021

Statistics Canada says the annual inflation rate continued to slow in September as drivers paid lower prices for gasoline than they did last year.

The agency said Tuesday (Oct. 15) its consumer price index for September was up 1.6% from a year ago compared with a year-over-year increase of 2% in August.

It was the slowest annual pace for inflation since February 2021 when it was 1.1%.

Gasoline prices in September fell 10.7% compared with a year earlier. Excluding gasoline, the annual pace of inflation was 2.2% in September.

Meanwhile, rent prices increased at a slower pace in the month but remained elevated as they rose 8.2% compared with a year ago following a year-over-year gain of 8.9%in August.

Statistics Canada said prices for food purchased from stores rose faster than overall inflation as they increased 2.4% in September, the same rate as in August. Prices for fresh or frozen beef gained 9.2%, while edible fats and oils rose 7.8% and eggs increased 5%.

Prices for food purchased from restaurants rose 3.5% compared with 3.4% in August.

The inflation report is the last major piece of economic data before the Bank of Canada’s interest rate decision on Oct. 23.

The central bank, which has a target of two per cent for inflation, has cut its key interest rate three times so far this year to bring it to 4.25%.

Governor Tiff Macklem has said it is reasonable to expect more interest rate cuts are coming, given the progress made on inflation, but the pace and timing of cuts will depend on the central bank's evaluation of the economic data.