Macklem Just Raised the Inflation Alarm: What Monday’s CPI Means for Your Wallet

 

Canadian Money Brief  |  Sunday, October 18, 2026  |  Written ahead of Monday’s 8:30 am ET inflation release

Bank of Canada Governor Tiff Macklem has just told Canadians what the central bank is about to say on October 28: its inflation forecast is going up, and by a lot. The reason is oil. With the Middle East conflict dragging on, shipments still curtailed and refinery capacity damaged, he said the risk that inflation broadens and lingers has gone up. Speaking to reporters from Bangkok on Saturday, he framed the coming decision as a simple question: will inflation drift back toward 2% on its own, or does the Bank need to raise rates to nudge it there?

Monday is the first real clue. Here is what is landing, what economists expect, and what it could mean for your gas bill, your grocery cart, your heating costs and your mortgage.

3.0% August CPI, year over year

3.2% September consensus (Reuters poll)

2.25% BoC policy rate, unchanged for nearly a year

Oct 28 Rate decision and new forecast

Monday brings three releases, not one

Most of the attention will go to the headline CPI number. But the Bank of Canada also publishes its own quarterly surveys of businesses and consumers the same day, and those may matter just as much for the October decision.

When (ET)	Release	Why it matters to you
Mon Oct 19, 8:30 am	September CPI (Statistics Canada)	Shows whether gas-driven inflation is spreading to the rest of the basket
Mon Oct 19, 11:30 am	BoC Business Outlook Survey and Canadian Survey of Consumer Expectations	Reveals whether firms plan to pass costs on to shoppers, and what households expect prices to do
Wed Oct 28, 9:45 am	Rate decision and Monetary Policy Report	Where the higher inflation forecast meets the interest-rate decision

What economists are expecting

A Reuters poll of economists, compiled by LSEG, expects annual inflation of 3.2% in September, up from 3.0% in August. BMO and TD are both at 3.2%. BMO notes that would match the fastest pace since December 2023. RBC is the outlier at 3.0%, arguing inflation held steady.

The engine is energy. BMO points to a 5.8% monthly jump in gasoline prices and a double-digit increase in heating oil, partly offset by softer travel and shelter costs. In August, gasoline was up 22.8% from a year earlier, and inflation excluding gasoline was a much tamer 2.4%.

The detail to watch is core inflation. TD expects the Bank’s preferred core measures, CPI-trim and CPI-median, to hold near 1.9%. In August they sat at 1.9% and 2.0%. If core stays close to 2% while the headline runs hot, that supports the view that this is an oil shock rather than a broad price spiral.

The Bank’s dilemma in one paragraph

Higher energy costs argue for tighter policy. A weakening economy argues the opposite: Canada lost 68,000 jobs in September, the second straight monthly drop in employment, and the trade dispute with the U.S. keeps clouding the fourth quarter. RBC’s Nathan Janzen calls October 28 a “live” meeting, but says a hike is not his base case, and RBC expects no hikes in 2026.

Why the market is not sure either

The signals are mixed. After the weak jobs report, LSEG data put the odds of a quarter-point hike on October 28 at about 34% on Friday. Reuters reported Saturday that markets were not pricing any change at the October or December meetings, but were pricing about a full percentage point of hikes over the course of next year. Expect those numbers to move once Monday’s data is out.

What it means for your budget

At the pump

Ottawa’s fuel excise tax relief, worth 10 cents a litre on gasoline and 4 cents on diesel, runs until January 31, 2027. That cushion is already baked into today’s prices, which means the real test comes when it phases out. A forecast upgrade from the Bank is a reminder that oil, not policy, is setting the direction for now.

Heating this winter

A double-digit jump in heating oil is the part of the CPI that lands hardest on households that burn it. If you heat with oil, this is the week to ask your supplier about price-lock or capped-price programs, before the cold sets in.

At the grocery store

This is the one bit of relief. Grocery inflation slowed to 2.8% in August, the first time since July 2024 that it came in below the headline rate, with dairy up just 0.7%. Prices are still about 29% higher than in August 2021. The Bank’s business survey is the thing to watch here: it will show whether companies facing higher fuel and freight costs plan to push them onto shelf prices.

Rent

Rent inflation picked up to 2.8% in August from 2.5% in July. Tenants and landlords alike should watch whether it keeps climbing in the September data.

Variable-rate mortgages and credit lines

With the policy rate at 2.25%, prime is 4.45%. A quarter-point hike would add roughly $65 to $70 a month on a $500,000 variable-rate mortgage with a 25-year amortization (an estimate; your lender’s figure will differ). Fixed-rate holders are not exposed until renewal, but the bond market has already pushed fixed rates higher.

How to read Monday’s number

If CPI prints…	What it would suggest
Around 3.0% or lower, core near 2%	Oil is not spilling into everyday prices; the case for holding on October 28 gets stronger
About 3.2% (in line), core steady	The “live” meeting stays live; the BoC surveys and the new forecast do the deciding
Above 3.2%, or core moving higher	Evidence of broadening inflation, the scenario Macklem flagged; hike risk rises

This is a rough framework for interpreting the data, not a forecast of what the Bank will do.

The bottom line

A higher inflation forecast does not automatically mean a higher interest rate. What matters is whether oil-driven price increases stay at the pump or spread, and with Canada losing jobs, the Bank has real reasons to wait. Monday’s CPI and the Bank’s own surveys are the best preview you will get before October 28.

Sources: The Canadian Press via BNN Bloomberg (Oct. 16–17, 2026); Reuters via MarketScreener (Oct. 17, 2026); Statistics Canada August CPI via The Canadian Press/Advisor.ca (Sept. 14, 2026); TD Securities via FXStreet (Oct. 16, 2026); ActionForex August CPI core detail; Daily Hive (Oct. 14, 2026) on fuel excise relief.

MoneySavings.ca provides general information, not personalized financial advice. Figures are accurate as of October 18, 2026 and may change after Monday’s releases.