Canada's Inflation Rises to 3.1% as Fuel Oil Prices Jump 58%

Gasoline and fuel oil pushed Canada's annual inflation rate to 3.1% in September, up from 3.0% in August, as the war in the Middle East kept fuel prices high, Statistics Canada said on Monday.Gasoline prices rose 27.8% from a year earlier, up from 22.8% in August, despite the switch to the cheaper winter blend. Fuel oil and other fuels rose 57.8%, up from 43.7%, with the heaviest burden in Atlantic Canada, where many homes are heated with oil. The overall energy index climbed 19%, up from 15.4%, and transportation costs rose 8.4%.Grocery prices rose 1.7%, the smallest annual increase since May 2024, as fresh vegetables fell 2.9% and sugar and confectionery fell 2.7%. Beef prices rose 8.7%, down from 11% in August. Grocery prices are still up 33% since September 2020.Shelter costs rose 1.8%, up from 1.5%, led by a 4.9% rise in home and mortgage insurance and a 1.2% rise in home maintenance and repair. Rent rose 2.8%, unchanged from August, and mortgage interest costs fell 0.2%. Excluding energy, Nova Scotia posted the fastest price growth in Atlantic Canada, at 3.3%.The headline number came in below the 3.2% that forecasts had called for. On a seasonally adjusted basis, prices rose 0.4% from August.The Bank of Canada sets rates on October 28, with its policy rate at 2.25%. Ahead of the data, markets were pricing in nearly a quarter-point hike by year-end. In July, the central bank projected inflation would ease to about 2.5% in the second half of 2026. Governor Tiff Macklem warned over the weekend that sustained high global energy prices will push up Canada's expected inflation.By Michael Kern for Oilprice.comMore Top Reads From Oilprice.comRecord Shipping Costs Force Oil Producers to Slash PricesHormuz Is Turning Shipping’s Fuel Bill Into a Supply CrisisMozambique Pitches Sasol and ROMPCO on $250 Million Gas Project