Canadian Inflation Jumps to 1.6% on Gasoline Prices

Canadian consumer price inflation in September jumped to its highest level since April on gasoline prices, but the gain was less than expected.

Highlights of Consumer Price Report

  • Annual inflation accelerated to 1.6%, due to higher gasoline prices, versus economist expectations for 1.7%
  • Excluding gasoline, annual inflation rate was unchanged at 1.1%
  • The average of the Bank of Canada’s three key core inflation measures was 1.60%, versus 1.57% in August. The core rate is the highest since January

Key Takeaways

While the inflation rate remains below the central bank’s target, the Bank of Canada has justified rate hikes by citing quickly vanishing excess capacity in the economy and by claiming the forces keeping inflation subdued are temporary.

Outside of gasoline however, the report showed inflation pressures remain muted in most sectors.

Other Details

  • For the three so-called core measures, the ‘common’ core rate was 1.5 percent, the ‘median’ core rate was 1.8 percent and the ‘trim’ measure was 1.5 percent
  • On the month, consumer prices were up 0.2 percent, versus a forecast for a 0.3 percent increase. On a seasonally adjusted basis, the price index rose 0.2 percent on the month
  • Major contributors. Higher gasoline prices were up 14 percent over the 12-month period, reflecting supply disruptions caused by Hurricane Harvey
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