Canada’s inflation rate slowed to 2.2 per cent in October, helped by cheaper gas and falling grocery prices, according to new data released by Statistics Canada. The slight cooling — down from 2.4 per cent in September — came in just above economists’ expectations but offered some welcome relief for consumers struggling with the cost of living.
A sharp monthly decline in gas prices played a major role, falling 4.8 per cent as retailers switched to less expensive winter fuel blends and global crude oil prices softened amid oversupply concerns. Grocery bills also eased, with prices dropping 0.6 per cent from September — the largest month-to-month decrease since the fall of 2020. Though food purchased from stores was still 3.4 per cent higher than a year ago, the pace of increase continued to slow from September’s four per cent rise. The deceleration was driven in part by lower prices for processed foods and fresh vegetables, though higher chicken prices helped moderate the overall decline.
BMO chief economist Doug Porter noted that Canada’s removal of most retaliatory tariffs against the United States in September likely contributed to lower grocery costs last month.
Despite easing in key categories, inflation proved sticky in other areas. Statistics Canada reported a rare jump in cellular service costs — up 7.7 per cent annually — marking the first yearly increase since April 2023. Home, mortgage and auto insurance premiums also continued to climb, particularly in Alberta. Over the past five years, home and mortgage insurance costs have surged 38.9 per cent nationally, while vehicle insurance premiums are up nearly 19 per cent.
The October inflation figures arrive just weeks before the Bank of Canada’s final interest rate decision of 2025, scheduled for Dec. 10. After two consecutive rate cuts in September and October, the central bank’s benchmark rate currently stands at 2.25 per cent.
While headline inflation cooled, some indicators of core inflation firmed slightly in October. Porter cautioned that the underlying data does not signal a meaningful shift in price pressures since the Bank of Canada’s previous decisions, reinforcing expectations that the central bank will likely pause rate changes in December.
CIBC senior economist Andrew Grantham echoed that view, saying the Bank of Canada will need to see a more prolonged and consistent slowdown in prices before adjusting rates again. He expects no further changes to the overnight rate through the end of next year.