{"id":321459,"date":"2025-10-21T15:21:14","date_gmt":"2025-10-21T15:21:14","guid":{"rendered":"https:\/\/www.europesays.com\/us\/321459\/"},"modified":"2025-10-21T15:21:14","modified_gmt":"2025-10-21T15:21:14","slug":"canadas-inflation-rate-quickens-to-2-4-ahead-of-boc-rate-decision","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/321459\/","title":{"rendered":"Canada\u2019s inflation rate quickens to 2.4% ahead of BoC rate decision"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

A customer browses the aisles of a grocery market in Toronto. Grocery prices have risen by 4 per cent over the past year.Frank Gunn\/The Canadian Press<\/p>\n

Canada\u2019s inflation rate accelerated by more than expected in September, but not enough to deter the Bank of Canada from cutting interest rates next week, according to several analysts.<\/p>\n

The Consumer Price Index rose 2.4 per cent in September on an annual basis, up from August\u2019s 1.9-per-cent pace<\/a>, Statistics Canada said Tuesday. Financial analysts were expecting an inflation rate of 2.2 per cent.<\/p>\n

The CPI results were heavily influenced by fluctuations in fuel costs. Year over year, gas prices fell by 4.1 per cent in September, but that was less than a 12.7-per-cent decline in August, putting upward pressure on headline inflation.<\/p>\n

Excluding gas, consumer prices have risen by 2.6 per cent over the past year, up from 2.4 per cent in August.<\/p>\n<\/p>\n

Just after the CPI report, investors were pricing in a 66-per-cent chance that the Bank of Canada will cut interest rates by a quarter-point on Oct. 29, according to Bloomberg data. That\u2019s down from 75-per-cent odds before the report was published.<\/p>\n

Still, with core measures of inflation remaining in check, several economists on Bay Street said the Bank of Canada was poised to continue cutting rates next week.<\/p>\n

\u201cConsumer prices posted surprisingly strong gains in September, but measures of underlying inflation suggest much less cause for concern,\u201d said Royce Mendes, head of macro strategy at Desjardins Securities, in a note to clients.<\/p>\n

\u201cWhile there might be scope for debate about inflation, there should be no disagreement that the economy is weak and in need of support,\u201d he added.<\/p>\n

The Bank of Canada resumed cutting rates in September after three consecutive holds, finding that growth and employment concerns outweighed the upside risks to inflation from tariffs. The bank\u2019s benchmark interest rate is now 2.5 per cent.<\/p>\n

Bank of Canada finds downbeat businesses and consumers ahead of rate decision<\/a><\/p>\n

Inflation has picked up in various categories. For example, grocery prices have risen by 4 per cent over the past year, and have been trending higher since April, 2024. Statscan noted that several items \u2013 including beef and coffee \u2013 have contributed to the upturn.<\/p>\n

Still, there are signs that Canada isn\u2019t facing a reignited inflation crisis. The Bank of Canada\u2019s core measures of inflation \u2013 which strip out volatile movements in the CPI \u2013 rose by an annual average of 3.15 per cent in September, a tad higher than 3.1 per cent in August.<\/p>\n

Andrew Grantham, senior economist at CIBC Capital Markets, said in a client note that \u201ccore measures of inflation were just subdued enough to support\u201d another quarter-point rate cut, which would bring the policy rate to 2.25 per cent.<\/p>\n

Speaking to media last week, Bank of Canada Governor Tiff Macklem said the economic outlook<\/a> for the rest of the year was tepid.<\/p>\n

\u201cIt\u2019s going to be growth, but it\u2019s going to be soft growth. It\u2019s not going to feel very good, and it\u2019s certainly not going to be enough to close the output gap,\u201d Mr. Macklem said.<\/p>\n

The Canadian economy shrank at an annualized rate of 1.6 per cent in the second quarter as exports to the United States plummeted. The unemployment rate, meanwhile, has risen to 7.1 per cent as companies get cautious on hiring.<\/p>\n

Private-sector forecasters expect the economy to eke out growth in the third quarter, but continue to struggle as U.S. tariffs weigh on Canadian exports. The Trump administration has hammered a number of Canadian industries with duties, including steel, aluminum and autos.<\/p>\n

The Globe and Mail reported on Tuesday that Canada and the U.S. could sign a trade deal on steel, aluminum and energy later this month, but that automobiles and softwood lumber wouldn\u2019t be part of the agreement.<\/p>\n

On Monday, the Bank of Canada published surveys of businesses and consumers that reflected a downbeat mood from both camps. For instance, most companies do not expect to increase the size of their workforce over the next year, according to survey results.<\/p>\n

Stephen Brown, deputy chief North America economist at Capital Markets, said he was leaning toward another rate cut next week, despite the upside surprise in the CPI.<\/p>\n

\u201cOverall, there\u2019s no clear message from the CPI, although we\u2019re still leaning toward another rate cut this month following Governor Tiff Macklem\u2019s somewhat dovish comments on the growth outlook last week,\u201d he said in a note to clients.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: A customer browses the aisles of a grocery market in Toronto. Grocery prices…\n","protected":false},"author":3,"featured_media":321460,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[8837,64,79,67,132,68],"class_list":{"0":"post-321459","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-appwebview","9":"tag-business","10":"tag-economy","11":"tag-united-states","12":"tag-unitedstates","13":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115412840204336194","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/321459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=321459"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/321459\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/321460"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=321459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=321459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=321459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}