Canada inflation rises to 3.1% in September on gasoline

Canada's annual inflation rate rose to 3.1 percent in September, Statistics Canada reported on October 19, 2026, up from 3.0 percent in August and slightly below the 3.2 percent forecast in a Reuters poll. The reading puts inflation back above the Bank of Canada's 1 to 3 percent target band after three months inside it.

Prices rose 0.1 percent on the month, and 0.4 percent on a seasonally adjusted basis.

Gasoline did the damage

Energy costs drove the increase. Gasoline prices jumped 27.8 percent from a year earlier, compared with 22.8 percent in August, and rose 6.1 percent on the month. Energy prices overall were up 19.0 percent year on year, from 15.4 percent in August. Fuel oil and other fuels climbed 57.8 percent, a rise felt hardest in Atlantic Canada, where many homes heat with oil.

Strip out gasoline and the picture looks calmer. Inflation excluding gasoline eased to 2.2 percent, down from 2.4 percent in August.

Food and shelter

Grocery prices rose 1.7 percent from a year earlier, the smallest yearly increase since May 2024. Fresh vegetables fell 2.9 percent. The relief only goes so far: food bought from stores still costs 33.0 percent more than it did in September 2020.

Shelter costs rose 1.8 percent, up from 1.5 percent in August, with rent up 2.8 percent. Air transportation jumped 19.4 percent.

Underneath the headline, the Bank of Canada's preferred core measures moved the other way. CPI median eased to 1.9 percent and CPI trim to 1.8 percent, both below the midpoint of the target band.

The October 28 decision

This is the last inflation report before the Bank of Canada's rate decision on October 28, 2026. Money markets expect the bank to hold its policy rate at 2.25 percent at that meeting, while pricing in a 25 basis point hike in December. Governor Tiff Macklem has said the new forecasts released with the October decision will show higher inflation.

That sets up a hard call for the central bank. The headline rate is back above target, pushed up by fuel. But the core measures it watches most closely are cooling, and grocery inflation is at its slowest in more than two years. The October 28 decision, and the forecasts that come with it, will show which side of that split the bank believes.