Canadian consumers experienced a continued cooling of inflation in September, as the Consumer Price Index (CPI) rose 1.6% compared to the same period last year, according to data released by Statistics Canada on October 15, 2024. This marks the slowest pace of yearly inflation growth since February 2021, down from the 2.0% increase recorded in August. Lower gasoline prices were the primary driver behind the deceleration in inflation.
While the CPI reflects a reduction in the rate of price increases, it does not mean prices are falling across the board. Canadians continue to grapple with the lingering effects of inflation, as prices remain significantly higher than pre-pandemic levels. Since September 2021, the CPI has risen 12.7%, with essential costs like rent and food showing significant price hikes.
Gasoline prices continued their decline in September, dropping 10.7% year-over-year, further deepening the 5.1% decrease seen in August. This decline in fuel prices, coupled with falling costs for other fuels such as heating oil, which fell by 22%, contributed substantially to the overall easing of inflation.
The fall in gasoline prices is largely attributed to a decrease in global crude oil prices. Weaker economic forecasts and lower production costs associated with the transition to winter fuel blends have driven the downward trend. Monthly gasoline prices fell 7.1% in September, following a 2.6% decline in August.
In addition to falling fuel prices, Canadians benefited from reduced transportation costs, which played a major role in the overall slowdown of inflation. Air transportation costs, for example, decreased by 4.4% year-over-year, and by a striking 14.3% month-over-month as the summer travel season came to an end.
Rent, another key component of household expenses, showed signs of slowing after months of rapid increases. Year-over-year, rent prices rose by 8.2% in September, down from 8.9% in August. However, despite this moderation, the cost of renting remains a significant burden for many Canadians, especially in provinces like New Brunswick (+10.1%) and British Columbia (+7.3%).
Although inflation has slowed, food prices continue to be a pain point for Canadian consumers. Food purchased from grocery stores rose by 2.4% in September, matching the pace seen in August. While certain items, such as seafood and nuts, saw price declines, staples like beef (+9.2%), edible fats and oils (+7.8%), and eggs (+5.0%) remain elevated.
Restaurants, too, saw price increases, albeit at a slower rate, with food purchased from these establishments rising by 3.5% year-over-year in September, up slightly from 3.4% in August.
Despite the recent slowing of inflation, people are still feeling the pressure of higher living costs. The persistent increases in rent and food prices highlight the ongoing challenges faced by households, even as energy prices cool.
In the short term, Canadians may see some relief from falling fuel prices, but the cost of everyday essentials like food and housing is expected to remain a challenge.