Canada’s headline inflation rate edged up to 3.1% in September 2026 from 3.0% in August, marking its highest level since May’s two-year peak of 3.2%, but coming in just below market expectations of 3.2%. The increase was driven largely by a sharp acceleration in gasoline prices, which rose 27.8% year-on-year compared with 22.8% in August, reflecting the recent surge in crude oil prices as the war in the Middle East led the US and Iran to tighten restrictions on oil and fuel tankers transiting the Persian Gulf.
Excluding gasoline, the Consumer Price Index (CPI) increased 2.2% from a year earlier, slowing from 2.4% in the prior month. Shelter costs also rose (1.8% vs. 1.5% in August), as higher long-term bond yields pushed up homeowners’ and mortgage insurance premiums by 4.9% year-on-year.
By contrast, food inflation eased to 2.2% from 2.8%, driven by a pronounced deceleration in prices for groceries, with food purchased from stores rising just 1.7% compared with 2.8% previously. Core inflation measures monitored by the Bank of Canada remained below the 2% target, with the trimmed-mean core rate at 1.8%, slightly under the forecast of 1.9%.