While Overall Inflation Is 1.6 Percent, These Items Still Remain Above 2 Percent Benchmark

A shopper browses in an aisle at a grocery store In Toronto on Feb. 2, 2024. The Canadian Press/Cole Burston

The fact that inflation fell to 1.6 percent in September came as good news amid the affordability crisis, but there are several price levels that remain elevated.

On Oct. 15, a Statistics Canada report showed that the latest inflation numbers were the consumer price index’s smallest year-over-year increase since February 2021. The Bank of Canada’s inflation target is 2 percent, meaning September’s numbers are good news for those awaiting further interest rate cuts.

Inflation began rising in March 2021, jumping from 2.2 percent to a high of 8.1 percent by June 2022, which led the Bank of Canada to raise interest rates. The key rate rose to 5 percent by July 2023, but the bank lowered it to 4.75 percent in June 2024, 4.5 in July, and 4.25 in September. 

According to Statistics Canada, September’s inflation numbers were below the bank’s goal due to lower gasoline prices, which declined by 10.7 percent year-over-year in September compared to a year-over-year decline of 5.1 percent in August. Without including gas prices, which fell due to economic growth concerns and lower costs associated with the switch to winter blends, September’s inflation would have been at 2.2 percent.

Additionally, the StatCan report showed that telephone services decreased by 8 percent, women’s clothing decreased by 6.4 percent, and men’s clothing decreased by 6 percent year-over-year.

Air transportation costs also went down, with the year-over-year prices declining by 4.4 percent in September, and by 14.3 percent compared to August. However, the month-over-month price movement is seasonal, with the summer travel period coming to an end.

Some items had considerably higher levels of inflation. For rent, year-over-year prices increased by 8.2 percent in September after an 8.9 percent gain in August. As well, mortgage interest costs rose by 16.7 percent when comparing year-over-year prices.

Food price inflation also remained high, increasing by 2.4 percent in September, the same amount that it rose in August. September was the second month in a row that prices increased at a faster rate than headline inflation.

Inflation varied by the exact food items, with the year-over-year prices declining by 4.9 percent for seafood and marine products, 0.9 percent for nuts and seeds, and 0.3 percent for fish. However, eggs increased by 5 percent, edible oils and fats increased by 7.8 percent, and fresh and frozen beef increased by 9.2 percent.

Eating out has also remained more unaffordable for many Canadians, with year-over-year restaurant food prices rising by 3.5 percent in September.

Property taxes and other special charges increased by 4.9 percent year-over-year, while passenger vehicle insurance premiums rose by 9.6 percent.

Regionally, year-over-year prices were highest in British Columbia (2 percent), Ontario and Alberta (1.9 percent), and Quebec (1.3 percent), while they were lower in P.E.I (1 percent), New Brunswick and Nova Scotia (0.9 percent), Manitoba (0.8 percent), and Saskatchewan and Newfoundland and Labrador (0.7 percent).

September’s overall inflation numbers are impacted by how much “weight” each item is given in the “basket” of good and services used to come up with the inflation numbers. For Statistics Canada’s methodology, shelter contributes 29.1 percent; transportation contributes 16.9 percent; food contributes 16.7 percent; household operations and furnishings contribute 13 percent; recreation, education, and reading contribute 10.2 percent; health and personal care contribute 5.2 percent; and clothing and footwear contribute 4.5 percent.