Annual inflation drops sharply below 2% target in September – National

Annual inflation drops sharply below 2% target in September – National

The annual rate of inflation slowed sharply in September, falling below the Bank of Canada’s two per cent target, Statistics Canada reported Tuesday.

Annual inflation was 1.6 per cent in the month, down from two per cent in August, thanks largely to continually lower gasoline prices, the agency said.

The yearly price pressures are now at their lowest levels since February 2021, StatCan said.

Price hikes at the grocery store remained steady at 2.4 per cent year-over-year. Despite annual declines for seafood and nuts and seeds, fresh or frozen beef prices were up 9.2 per cent last month, edible fats and oils cost 7.8 per cent more and egg prices rose 5.0 per cent annually.


Click to play video: 'Something’s fishy: 1 in 5 seafood products are mislabelled, study finds'


Something’s fishy: 1 in 5 seafood products are mislabelled, study finds


Prices for airfare were down 4.4 per cent in September and fell 14.3 per cent on a monthly basis, which StatCan noted was typical of seasonal trends heading into the fall.

Story continues below advertisement

While rent and higher mortgage costs continue to lift inflation, there was some cooling on the shelter front in September as well. Rents rose 8.2 per cent annually last month, down from 8.9 per cent in August, StatCan said.

Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday.

Get weekly money news

Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday.

Despite the recent easing in the annual figures, the agency added that, over the past three years, the cost of living has soared and remained elevated. The overall consumer price index is up 12.7 per cent over three years, with rent up 21 per cent and grocery prices up 20.7 per cent over that period.

Calls grow for half-point rate cut

The Bank of Canada has been lowering its benchmark interest rate in recent months as its focus shifts increasingly towards fears that inflation will dip too far below its two per cent target.

The sharp drop comes ahead of the Bank of Canada’s next interest rate decision on Oct. 23. While another interest rate cut is widely expected by economists, forecasters are weighing whether a steeper, 50-basis-point drop could be in the cards, rather than the typical 25-basis-point step.

Story continues below advertisement

Some economists said Tuesday that the sharp drop in inflation last month tilts the scales towards a bigger cut.

BMO chief economist Doug Porter said in a note to clients Tuesday that the latest inflation figures, alongside recent data releases showing consumer and business sentiments are still depressed and the unemployment rate remains elevated, “will be enough to prompt the Bank of Canada to opt for a 50 bp rate cut later this month.”

Canadian swap markets increased the bets for an oversized 50 basis point rate cut next week to 67 per cent after the inflation data was released, according to Reuters, up from roughly 52 per cent previously.

RBC economist Claire Fan said in a note Tuesday that while cheaper gasoline prices were the biggest factor fuelling the drop in headline inflation, signs of progress in the Bank of Canada’s closely watched core metrics also support lower interest rates.

“We think there’s little reason for the BoC to turn their worries back from a weakening economy to inflation, and expect them to go ahead with cutting by 50 bps next week,” Fan wrote.

More to come…

— with files from Reuters


&copy 2024 Motorcycle accident toronto today, Toronto Car Accident News.