Preview: Due October 19 - Canada September CPI - Steady with slightly slower BoC core rates

Canadian gasoline prices did increase in September, but the move was quite modest, simply reversing a modest decline seen in August. For September’s CPI we expect a 0.3% increase overall on the month seasonally adjusted, up from 0.2% in August, with the ex food and energy rate rising by a seasonally adjusted 0.2%, following four straight gains of 0.3%. Before seasonal adjustment the data is likely to show seasonal softness, with overall CPI unchanged and CPI ex food and energy falling by 0.1%.

We do not believe underlying inflationary pressures are trending at 0.3% per month, with the four 0.3% straight seasonally adjusted ex food and energy gains following four straight months at 0.1% or lower. The economy gained momentum in Q2 but growth is likely to slow somewhat in Q3 and further in Q4 as fresh US tariffs bite. August’s ex food and energy gain was less than broad based, lifted by a 0.7% rise in recreation, education and reading and an above trend 0.3% increase in shelter. Traveller accommodation and telephone services saw strong gains that are unlikely to be repeated. There is however upside September risk in air fares on energy pass-through.

That the BoC’s core rates picked up in September 2025 increases the risk of their slowing in September 2026. We expect slowing in CPI-Median to 1.9% from 2.0%, CPI-Trim to 1.8% from 1.9%, and CPI-Common to 2.5% from 2.6%. The ex food and energy rate is not one of the BoC’s core rates and we expect it to remain at 2.1%, though slowing to 2.06% from 2.12% before rounding. Before rounding we even expect a marginal slowing in overall CPI, to 2.97% after two months at 3.03%.