Canada’s Inflation Cools to 2.2% in October Amid Cheaper Gas and Groceries

 

Motorists fuel up at an ONroute gas station near Maple, Ont., on April 1, 2025. Lower gas prices helped bring overall inflation down in October, Statistics Canada says.

Canada’s annual inflation rate eased to 2.2% in October, down from 2.4% in September. The slowdown was largely driven by falling gasoline and grocery prices, offering some relief to consumers after months of persistent cost pressures.

Key Drivers of the Decline

• Gasoline prices dropped 4.8% month-over-month, as retailers switched to cheaper winter fuel blends and global crude oil prices fell due to oversupply concerns.
• Grocery prices fell 0.6% in October, marking the largest monthly decline since September 2020. Annual grocery inflation cooled to 3.4%, down from 4% in September, with lower costs for processed foods and fresh vegetables offsetting higher prices for chicken.
• Excluding gasoline, the Consumer Price Index (CPI) rose 2.6% year-over-year, showing that underlying inflationary pressures remain.

Broader Economic Context

The Bank of Canada has emphasized that traditional measures of core inflation are less reliable in today’s volatile economy. While headline inflation has cooled, cellular service costs rose 7.7% in October, their first increase since April 2023, keeping some upward pressure on overall prices.

Economists note that the October figures were slightly above expectations but signal progress toward stabilizing inflation closer to the central bank’s 2% target. The easing trend could influence future monetary policy decisions, particularly as the Bank of Canada continues to balance inflation control with economic growth.

Regional Variation

Inflation rates varied across provinces, with Quebec recording 3.2%, while Ontario and Alberta saw lower rates at 1.8%. This reflects differences in local energy costs, housing markets, and food price dynamics.

In summary: Canada’s inflation cooled to 2.2% in October, thanks to cheaper gas and groceries, though underlying pressures remain. The moderation offers cautious optimism for households and policymakers as the economy adjusts to shifting global energy and food markets.