While that number falls just shy of the Bank of Canada’s 2% target, it marks the fifth straight month inflation has stayed below goal—a signal of continued economic cooling.
On a monthly basis, prices dipped 0.1%, slightly weaker than expectations for no change. The latest figures come at a critical time, just a day before the Bank of Canada’s governing council makes its next interest rate decision.
What’s Driving Prices?
- Gasoline: Pump prices are still falling, but not as steeply as in July. A comparison to last year—when fuel costs had already dropped—softened the decline.
- Cellphone plans: Wireless costs ticked up as fewer providers offered back-to-school deals.
- Food: Meat prices climbed, though Canadians found some relief in cheaper fresh fruit.
- Travel services: Sharper declines in airfare and vacation packages helped cool overall inflation.
Even when stripping out gasoline, inflation held at 2.4%, just a touch lower than the 2.5% seen earlier this summer. The Bank of Canada’s preferred “core” measures averaged 3.05%, only slightly softer than July’s 3.1%.
The Bigger Picture
Canada’s economy has slowed notably in 2025, with unemployment edging higher and trade-sensitive industries—like manufacturing and wholesale—feeling the brunt of U.S. tariffs and global uncertainty. Still, recent signs of resilience are emerging as sales pick up in certain sectors.
The Bank of Canada has kept its policy rate steady for three straight meetings, but markets are watching closely to see if policymakers will pivot toward a rate cut this week to stimulate growth.
Why This Matters for Canadians
For households, modest inflation provides mixed news: while food and wireless bills are rising, housing and borrowing costs may soon get relief if the central bank moves to cut rates. For investors, steady inflation just under target could signal that Canada remains on a stable path compared to more volatile global markets.
At Lendworth Canada, we help borrowers, homeowners, and investors navigate shifting economic conditions with mortgage solutions and asset-backed investment opportunities designed to perform through market cycles.
👉 Bottom Line: Inflation is warming slightly, but the real question is how the Bank of Canada will respond. A rate cut could reshape borrowing, investing, and housing costs across the country—and create opportunities for those prepared to act.