Canada inflation accelerates to 3.1% in September as energy prices rise
Key Facts
Canada's annual inflation rate accelerated to 3.1% in September, according to Reuters coverage published on October 19, 2026, as energy prices rose and core measures declined ahead of the Bank of Canada's next decision. The annual increase in the consumer price index had reached 3.0% in August, marking an acceleration in prices from the previous month. Still, the September reading was below the forecasts of analysts polled by Reuters, who had expected annual inflation to reach 3.2%. On a monthly basis, the consumer price index rose 0.1% in September, according to figures reported by the agency following the release. That increase followed a monthly decline of the same magnitude, 0.1%, in August.
Energy prices rose 19% year-on-year in September, according to Reuters, as increases in this component of consumer prices accelerated. Energy prices had risen 15.4% year-on-year in August before the increase widened the following month. In an analysis of the September figures, Royal Bank of Canada said gasoline prices rose 27.8% from a year earlier. Gasoline contributed 1.1 percentage points to headline inflation, according to the bank's calculations in its analysis of the monthly reading. Alongside higher energy prices, annual shelter inflation accelerated to 1.8% in September from 1.5% in August, according to the same analysis.
By contrast, the median measure of core inflation fell to 1.9% in September, according to Investing's coverage of the Canadian price figures. The trimmed-mean measure of core inflation also declined to 1.8% that month as headline inflation accelerated. The Bank of Canada had held its overnight interest rate target at 2.25% at its previous decision in September, according to the monetary policy statement issued at the time. The bank warned in that statement that persistently elevated oil prices and refining margins increased the risk of price pressures spreading to other components. It said the persistence of those increases heightened the "risk of pressures passing through to prices of other goods and services."
Among businesses, a Bank of Canada survey showed inflation expectations rose in results collected after trade negotiations collapsed, alongside new tariffs and renewed increases in energy prices. The bank said in its presentation of the survey results that "inflation expectations rose alongside new tariffs and the recent rebound in energy prices." On employment, participating firms reported that their hiring intentions remained weak, according to the results published by the central bank. Most companies planned to keep staffing levels unchanged rather than expand their workforces, according to the same survey. A majority of firms also reported that they still had spare capacity as their price expectations rose.
Among consumers, the expectations survey released alongside the inflation data showed an increase in long-term price expectations, according to the Bank of Canada. Those expectations reached the level of short-term expectations, which were already elevated, according to the bank's description of the survey results. At the same time, consumers' spending plans deteriorated from already weak levels, according to the central bank's findings on household expectations. Spending plans weakened despite improvements in consumers' financial conditions and perceptions of the labour market, the survey showed. The Bank of Canada said in its presentation of the findings that "spending plans deteriorated from already weak levels, despite improvements in financial conditions and perceptions of the labour market."
In markets, the Canadian dollar rose after the inflation data were released, according to Reuters coverage on the day of the release, with expectations for upcoming interest rate decisions remaining a factor in traders' pricing. The agency reported after the release that markets were betting the Bank of Canada would leave interest rates unchanged at its October meeting. Markets were, however, pricing in a 25-basis-point increase in December, according to Reuters, after reviewing the September inflation reading. The Bank of Canada's next interest rate decision is due on October 28, 2026, according to the upcoming events calendar published on the central bank's website. The Monetary Policy Report will also be released that day, as scheduled in the bank's calendar for the rate announcement and report.