Canada's Inflation Rose to 3.1% in September on Gasoline, but Core Measures Eased

Canadian consumer prices rose 3.1% in the 12 months to September, up from 3.0% in August, Statistics Canada said on Monday 19 October. Gasoline did the lifting: pump prices were 27.8% higher than a year earlier, after a 22.8% rise the month before. Strip gasoline out and the story changes. That measure slowed to 2.2% from 2.4%, and all three of the Bank of Canada's core measures eased.

That split is the story. The headline moved the wrong way for the central bank, but the parts of the basket that show underlying pressure moved the right way. Grocery inflation dropped to its lowest rate since May 2024, and rent growth held steady. For the Bank of Canada, which decides on rates on 28 October, it is the clearest sign yet that high oil prices have not spread far into the rest of the economy.

The Canadian dollar wobbled and then firmed. In the hour of the 12:30 UTC release, USD/CAD swung between 1.4068 and 1.4113 before settling near 1.4100. It closed Monday at about 1.4106 and fell to a low of 1.4028 on Tuesday before trading near 1.4062 at 18:00 UTC. Our preview of the release set out what to look for; this story covers what came out.

Energy pushed the headline higher

Energy prices rose 19.0% from a year earlier in September, up from 15.4% in August. Statistics Canada said crude oil prices climbed to their highest level since May amid continued uncertainty about the wars in the Middle East, and that fed into gasoline and heating fuel. The seasonal switch to cheaper winter-blend gasoline took a little of the edge off, but not enough to stop the annual rate rising by five points.

Heating fuel jumped the most. Prices for fuel oil and other fuels were 57.8% higher than a year before, after a 43.7% rise in August. Households in Atlantic Canada felt it most, because fuel oil is more widely used for heating there, and that region also had the highest inflation once energy is taken out: 3.3% in Nova Scotia against 2.1% nationally.

Oil remains the swing factor. US crude futures traded between $95.25 and $101.37 a barrel on Tuesday and were near $98 at 18:00 UTC, while Brent was close to $109. Those levels are higher than the averages seen through September, so October's energy figure may push the headline up again unless prices fall back soon.

Food, rent and the core measures cooled

Outside energy, price growth slowed. Food bought from stores rose 1.7% from a year earlier, down from 2.8%, the smallest increase since May 2024. Fresh vegetables fell 2.9% and sugar and confectionery 2.7%, while beef prices rose 8.7%, a slower pace than August's 11.0%. Grocery prices are still 33.0% higher than in September 2020, so the slowdown will not feel like relief at the checkout yet.

Shelter prices rose 1.8%, up a little from 1.5%, but most of that came from fuel oil and from home and mortgage insurance, which rose 4.9%. Rent grew 2.8%, the same as in August. Mortgage interest costs fell 0.2% and the homeowners' replacement cost index fell 1.9%, both unchanged from the previous month.

The Bank of Canada's own core measures all eased. CPI-trim, which cuts out the most extreme price changes each month, slowed to 1.8% from 1.9%. CPI-median, the price change in the middle of the basket, fell to 1.9% from 2.0%. CPI-common, which tracks price changes shared across categories, dropped to 2.4% from 2.6%. Two of the three now sit below the bank's 2% target.

Source: Statistics Canada, table 18-10-0256-01, measures of core inflation (Bank of Canada definitions), year-on-year change.

What it means for the Bank of Canada on 28 October

The Bank of Canada held its policy rate at 2.25% on 2 September. Its next decision comes at 09:45 Ottawa time on 28 October, 13:45 UTC, together with its quarterly Monetary Policy Report. The September figures give it room to stay patient: headline inflation is above target because of fuel, while the measures it uses to judge underlying pressure are close to or under 2%.

That is a different position from several other central banks. The Federal Reserve, the Reserve Bank of Australia and the European Central Bank have all raised rates since early September, with energy costs pushing inflation higher. Canada's figures suggest the energy shock has so far stayed in energy, which is the condition a central bank needs before it can look through a jump in the headline rate.

There is still risk in the other direction. A one-month rise of 0.4% after seasonal adjustment is not small, and oil near $100 a barrel could keep the headline above 3% for some time. If firms start passing higher transport and heating costs into other prices, the core measures would turn up again, and October's data, due on 16 November, would show it first.

What traders can take from it

Canada's dollar depends on oil as well as on the central bank, which makes inflation days harder to trade than they look. These points can help.

• Look past the headline to CPI-trim and CPI-median. Those are the measures the Bank of Canada leans on, and they moved lower in September.
• Track oil alongside USD/CAD. Higher crude tends to support the loonie through trade, even when it also lifts inflation, so the two effects can cancel out.
• Expect the market to treat 28 October as a two-sided event. A hold is the base case suggested by the core data, but the Monetary Policy Report will update the bank's forecasts and could change the tone.
• Remember the Fed decides on the same day, about four hours later. Moves in USD/CAD that afternoon may have more to do with Washington than Ottawa.
• Respect the 1.4030 area. USD/CAD reached 1.4028 on Tuesday, and a clean break lower would extend a decline that began in early October.

See session times on our forex market hours page and every central bank date on the economic calendar. Convert any amount between the US and Canadian dollar with the currency converter, and size each trade with the position size calculator.

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Sources: Statistics Canada: Consumer Price Index, September 2026 (19 October 2026) · Statistics Canada: table 18-10-0256-01, measures of core inflation · Bank of Canada: interest rate announcement, 2 September 2026 · Statistics Canada: Consumer Price Index, August 2026