- The consumer price index rose 1.9% year-on-year in September, below expectations for a 2.1% increase. Month-on-month prices pulled back 0.1% in September (seasonally adjusted).
- Despite the headline decline, most subcategories were up on the month (seasonally adjusted), led by clothing prices (up 0.9%), food prices (up 0.3%), and health and personal care (up 0.3%) in September. On the other side of the ledger, recreation and education prices plummeted 2.0%, due mainly to a tuition cut in Ontario, while transportation costs fell 0.4%, due mainly to falling gasoline prices.
- The Bank of Canada’s core measures, on the other hand, all edged up a tenth in September, with CPI-median at 2.2%, CPI-trim at 2.1%, and CPI-common at 1.9%. The average of the three measures is 2.1%, up from 2.0% in August.
Key Implications
- Once again, not much to see here. The softness in the headline number reflects lower airfares, which have been highly volatile and the one-off impact of the cut in Ontario tuition. Outside of that most categories saw increases in the month, but overall inflation remains close to the 2.0% mark.
- Canadian economic data remains mixed, but still generally solid. On the GDP front, growth looks to have cooled in the third quarter, but job growth remains buoyant and the housing market continues to make strides. This is likely to keep the Bank of Canada on the sidelines when it meets later this month.
