National Bank economists Taylor Schleich and Ethan Currie wrote that unless recent inflation trends were \u201ctotally derailed\/recast\u201d by today\u2019s data, the Bank of Canada is likely to cut interest rates again at its October 29 announcement. (Photo by Liang Sen\/Xinhua via Getty Images) \u00b7 Xinhua News Agency via Getty Images <\/p>\n
The annual inflation rate in Canada picked up steam, rising to 2.4 per cent in September, according to Statistics Canada data published Tuesday. Financial industry observers had expected the inflation rate to increase to 2.2 per cent, according to consensus estimates published by CIBC Economics.<\/p>\n
Even with the rise in headline inflation, the Bank of Canada (BoC) is still likely to cut interest rates at its announcement next week, CIBC economist Andrew Grantham said in a note about the September data, with various core inflation measures “just subdued enough to support” a 25-basis-point reduction.<\/p>\n
The September increase followed a 1.9 per cent annual gain in August<\/a> and was driven mainly by a smaller year-over-year drop in gasoline prices. Pump prices fell 4.1 per cent in September after a 12.7 per cent decline in August, as refinery maintenance and disruptions in Canada and the U.S. lifted costs.<\/p>\n Even excluding gasoline from the index, prices rose 2.6 per cent year-over-year, pointing to continued inflationary pressure from other areas, with shelter and food costs also contributing to the gain. Rent rose 4.8 per cent nationwide, led by a 9.6 per cent increase in Quebec, while grocery prices climbed 4.0 per cent from a year earlier. Fresh vegetables and sugar products posted particularly strong increases after weaker readings earlier this year.<\/p>\n Measures of core inflation remained higher, with CPI-median steady at 3.2 per cent (with the August figure revised upward) and CPI-trim rising 0.1 percentage points to 3.1 per cent. The BoC has traditionally used those measures to assess underlying inflation with more volatile prices removed \u2014 but the usefulness of that data has recently been questioned<\/a> by economists and the central bank itself.<\/p>\n “The Bank has downplayed its previous preferred measures of core inflation recently \u2026 instead using a wider range of indicators as well as measures of dispersion,” CIBC’s Grantham wrote. Various averages for that wider range “were broadly in line with the prior month,” he said, “suggesting that while price pressures didn’t ease further there was also less evidence (relative to the headline) of a reacceleration.”<\/p>\n Today\u2019s Consumer Price Index data follow Monday\u2019s release of the BoC\u2019s business and consumer surveys, which National Bank of Canada economists Taylor Schleich and Ethan Currie characterize as \u201cdownbeat.\u201d Furthermore, the economists say, markets \u201cnow appear to be looking through\u201d a surprise jump in the labour market<\/a> earlier this month that observers at the time said complicated the BoC\u2019s considerations.<\/p>\n On a monthly basis, CPI increased 0.1 per cent in August. Seasonally adjusted, CPI rose 0.4 per cent on the month.<\/p>\n This story will be updated.<\/p>\n John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.<\/p>\n Download the Yahoo Finance app, available for Apple and Android.<\/p>\n","protected":false},"excerpt":{"rendered":"National Bank economists Taylor Schleich and Ethan Currie wrote that unless recent inflation trends were \u201ctotally derailed\/recast\u201d by…\n","protected":false},"author":2,"featured_media":229436,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[109444,52,45,49,48,49308,78994,13830],"class_list":["post-229435","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-annual-inflation-rate","tag-bank-of-canada","tag-business","tag-ca","tag-canada","tag-core-inflation","tag-headline-inflation","tag-national-bank"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/229435","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=229435"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/229435\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/229436"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=229435"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=229435"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=229435"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}