Canada’s headline CPI accelerated from 3.0% yoy in August to 3.1% in September, but came in below market expectations of 3.2%, as higher gasoline prices drove the increase. On a monthly basis, CPI rose 0.1%, following a 0.1% decline in August and undershooting expectations for a 0.2% increase. According to Statistics Canada, gasoline inflation accelerated from 22.8% to 27.8% yoy, while overall energy inflation strengthened from 15.4% to 19.0%, reflecting higher crude oil prices amid the ongoing Middle East conflict. However, CPI excluding gasoline slowed from 2.4% to 2.2%, highlighting the divergence between energy-driven headline inflation and broader price pressures.
More importantly, all three Bank of Canada core inflation measures eased and undershot expectations. CPI-common declined from 2.6% to 2.4%, CPI-median slipped from 2.0% to 1.9%, and CPI-trim moderated from 1.9% to 1.8%. Grocery inflation also slowed substantially from 2.8% to 1.7%, its weakest annual increase since May 2024, supported by falling prices for fresh vegetables and sugar products alongside slower increases in beef prices. Shelter inflation provided a partial counterweight, accelerating from 1.5% to 1.8%, partly due to higher fuel oil, home insurance and maintenance costs. Rent inflation was unchanged at 2.8%.
The September report therefore points to moderating underlying inflation despite renewed pressure from energy prices. While headline CPI has moved further above the Bank of Canada’s 2% target, the simultaneous decline in all three core measures, together with slower grocery inflation and easing CPI excluding gasoline, suggests that price pressures are not accelerating uniformly across the economy. CPI-common at 2.4% nevertheless indicates that underlying inflation has not fully returned to target. The distinction between externally driven energy inflation and broader domestic price pressures will be important in assessing whether September’s headline acceleration develops into a more persistent inflation problem.
Data Summary
Headline and Core Inflation
| Indicator | Aug | Expected | Sep |
|---|---|---|---|
| Headline CPI (% yoy) | 3.0% | 3.2% | 3.1% |
| Headline CPI (% mom) | -0.1% | 0.2% | 0.1% |
| CPI-common (% yoy) | 2.6% | 2.6% | 2.4% |
| CPI-median (% yoy) | 2.0% | 2.0% | 1.9% |
| CPI-trim (% yoy) | 1.9% | 1.9% | 1.8% |
Monthly headline CPI figures are not seasonally adjusted. Seasonally adjusted CPI increased 0.4% mom in September, following 0.3% in August.
Selected Inflation Components — Year-on-Year
| Indicator | Aug | Sep |
|---|---|---|
| Energy | 15.4% | 19.0% |
| Gasoline | 22.8% | 27.8% |
| Fuel oil and other fuels | 43.7% | 57.8% |
| CPI excluding gasoline | 2.4% | 2.2% |
| Groceries | 2.8% | 1.7% |
| Shelter | 1.5% | 1.8% |
| Rent | 2.8% | 2.8% |
Source: Statistics Canada, Consumer Price Index, September 2026.
Key Takeaways
- Headline inflation rises but misses expectations: Annual CPI accelerated from 3.0% to 3.1% in September, below the 3.2% consensus. Monthly CPI increased 0.1%, also undershooting expectations for a 0.2% rise.
- Gasoline drives the headline acceleration: Gasoline inflation jumped from 22.8% to 27.8% yoy, pushing overall energy inflation from 15.4% to 19.0%. However, CPI excluding gasoline slowed from 2.4% to 2.2%, highlighting the distinction between energy-driven headline inflation and broader price pressures.
- All three BoC core inflation measures ease: CPI-common declined from 2.6% to 2.4%, CPI-median from 2.0% to 1.9%, and CPI-trim from 1.9% to 1.8%. All three undershot expectations, providing evidence that underlying inflation pressures moderated despite the higher headline reading.
- Grocery inflation slows substantially: Food purchased from stores increased 1.7% yoy, down from 2.8% and the slowest annual increase since May 2024. Falling vegetable prices and more moderate increases in several other food categories contributed to the improvement. Nevertheless, grocery prices remained 33.0% above September 2020 levels.
- Shelter inflation provides a counterweight: Shelter inflation accelerated from 1.5% to 1.8%, partly reflecting higher fuel oil, home insurance and maintenance costs. Rent inflation held steady at 2.8%, demonstrating that price pressures are not easing uniformly across all categories.
- Underlying inflation diverges from the energy-driven headline: The simultaneous easing in all three BoC core measures suggests that September’s headline acceleration has not been accompanied by a broad-based increase in underlying inflation. However, CPI-common at 2.4% indicates that some underlying pressures persist, while continued energy inflation could create risks of wider price transmission.
