Canada's inflation rises to 3.1%, but without gasoline it is 2.2% and falling

Canada's annual inflation rate rose to 3.1% in September from 3.0% in August, Statistics Canada reported Monday. The headline looks like inflation is building again. The detail says it is one product.

The number behind the number

Gasoline prices were up 27.8% from a year earlier, against 22.8% in August. Strip gasoline out and the consumer price index rose 2.2% in September, after 2.4% in August. In other words, the part of the basket that is not at the pump got slower while the headline got faster.

Statistics Canada tied the energy surge to crude oil, which it said reached its highest level since May amid uncertainty over the wars in the Middle East. Energy as a whole rose 19.0% year over year, up from 15.4%. Fuel oil and other fuels were up 57.8%, after 43.7% in August, and the agency said that hit Atlantic Canada hardest because fuel oil is more widely used there. Excluding energy, inflation was 2.1% nationally, but 3.3% in Nova Scotia, 2.6% in Prince Edward Island and New Brunswick, and 2.4% in Newfoundland and Labrador.

Where prices are easing

Grocery prices rose 1.7% from a year earlier, down from 2.8% in August and the smallest increase since May 2024. Fresh vegetables fell 2.9%, and fresh or frozen beef slowed to 8.7% from 11.0%. Shelter rose 1.8%, up from 1.5%, driven by fuel oil and by homeowners' insurance (+4.9%). Rent rose 2.8%, unchanged. Mortgage interest costs fell 0.2%. Month over month, the index rose 0.1% unadjusted and 0.4% seasonally adjusted.

Who it hits

A heating-oil dealer or a trucking company in the Maritimes is living in the 57.8% number, not the 3.1% one. A grocer or restaurant buyer in Ontario or Alberta is seeing the opposite: food input inflation at 1.7%, with energy the main cost still climbing. For U.S. businesses selling into Canada, the split matters because fuel-driven inflation squeezes Canadian household budgets without a matching rise in wages, while a weaker core means less pressure on the central bank to act.

What it means for the Bank of Canada

The Bank of Canada's policy rate has been 2.25% since its October 29, 2025 cut and was left unchanged at every decision this year. The next announcement, with a Monetary Policy Report, is October 28. A central bank generally looks through a one-commodity price spike, but a spike that lasts raises the risk it leaks into other prices. This report gives both sides material: the headline is above the 3.0% of August, while the ex-gasoline reading moved the other way. We are not forecasting the decision.

For context on the same economy, see our earlier look at Canada's flat July GDP. The next CPI release is November 16.

Sources: Statistics Canada, The Daily, Consumer Price Index, September 2026 (released October 19, 2026); Bank of Canada. This is market information, not investment advice.