Canadian prices, as measured by the Consumer Price Index (CPI), rose 3.8 per cent on a year-over-year basis in September, down from 4 per cent in August. Excluding gasoline, CPI rose 3.7 per cent year-over-year in September. Shelter costs were up 6 per cent year over year, the same increase as August, driven by mortgage interest costs (up 31 per cent from last year) along with rents (up 7 per cent). Grocery prices were up 5.8 per cent year over year in September, down from 6.9 per cent in August and 8.5 per cent in July. Month over month, seasonally adjusted CPI rose 0.2 per cent. In BC, consumer prices rose 3.3 per cent year-over-year.
Price appreciation took a breather last month, bucking expectations and slowing in September. While shelter inflation continued to show high price growth, food inflation has softened significantly since the start of the year, falling by nearly half from over 10 per cent in January. While still stubbornly high, the Bank of Canada's measures of core inflation, which strip out volatile components, moderated in September. Amid weakening labour markets and flat GDP growth, this unexpectedly cool inflation report offers hope that the Bank of Canada may not need to tighten as much as expected, and bond yields fell following the release. Markets now put the majority odds on the bank holding rates steady for the remainder of the year.
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