Canada’s inflation rate dropped to 1.6% in September, as reported by Statistics Canada, following its 2% target in August. This is the smallest year-over-year increase in the consumer price index since February 2021. The drop was mainly due to lower gasoline prices, which fell by 10.7% compared to last year. Without gasoline, the overall inflation rate stayed at 2.2%, the same as in August.
Despite the cooling inflation, the cost of rent and groceries remained high. Food prices continued to rise faster than overall inflation for the second month in a row. While the prices of seafood, nuts, seeds, and fish went down, costs for beef and eggs increased. Rent prices also saw a slower rise, increasing by 8.2% in September, down from 8.9% in August.
Some experts believe this inflation report increases the chances of a significant interest rate cut by the Bank of Canada at their upcoming meeting. So far, the bank has lowered rates three times this year, and this latest data might push them to act more aggressively.
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