Canada's Inflation Rate Cools to 1.6% in September 2024, Driven by Falling Gasoline Prices
Canada’s inflation rate showed a significant slowdown in September 2024, as the Consumer Price Index (CPI) rose by 1.6% year-over-year, down from 2.0% in August. This marks the smallest yearly increase since February 2021. The primary driver behind this deceleration was a sharp drop in gasoline prices, which fell 10.7% compared to September 2023. This drop in fuel prices has exerted downward pressure on the overall inflation rate, contributing to the notable cooling.
While the inflation rate may be easing, it’s important to note that Canadians are still grappling with elevated price levels for many essentials. Over the past three years, the overall CPI has risen by 12.7%. Day-to-day necessities like rent and groceries have seen significant price increases during this period. Rent, for instance, has surged by 21%, and food prices have climbed by 20.7% since September 2021. Even though inflation is slowing, these long-term trends continue to impact households across the country.
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On a monthly basis, the CPI dropped by 0.4% in September, following a 0.2% decline in August. Again, falling gasoline prices were the key factor, with gas prices dropping by 7.1% in just one month. Lower crude oil prices and reduced costs from the transition to winter fuel blends have contributed to this decline. However, prices for other fuels, like heating oil, also fell, dropping 22% year-over-year.
Not all price categories experienced a slowdown. Grocery prices remained elevated, increasing by 2.4% in September, the same pace as in August. Canadians saw increases in the cost of beef, edible oils, and eggs, among other staples. Meanwhile, rent prices rose at a slower pace compared to earlier months but were still up 8.2% year-over-year.
This data, released ahead of the Bank of Canada’s next interest rate decision, may influence monetary policy, with markets now expecting the possibility of a rate cut to stimulate economic activity further.
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