Canada's inflation rate has finally slowed

After two months of consistent acceleration, inflation in Canada finally eased its pace to 3.8% for September. In August, the figure was closer to 4%.

According to economists, this is due to lower prices for various goods and services, including travel, durable goods and some food items.

Grocery basket

According to a report from Statistics Canada, food price growth slowed last month but remained above overall inflation. In September, it amounted to 5.8% year-on-year after a 6.9% increase in August.

Prices for which products have grown the slowest:

• for meat ( 4.4%);
• for dairy products ( 4.0%);
• for coffee and tea (2.7%)

However, some food items have become expensive faster than before. These include:

• fresh fruit ( 3.0%);
• fish ( 5.1%);
• bakery products (8.0%);
• edible fats and oils (14.8%).

Economist Mike von Massow assumes that the trend will continue and that such an appalling rate of price growth should not be expected. In his opinion, it was connected, among other things, with Russia's invasion of Ukraine. Ukraine was a major exporter, and the war on its territory disrupted trade and led to higher prices for wheat and other commodities.

But the conflict in Israel and Gaza is unlikely to have as big impact on global food supply chains, as North American suppliers get a limited amount of greenhouse produce from the region.

Other areas with favorable statistics

In September, Canadians started paying less:

• for airline tickets (by as much as 21.1%);
• for gasoline (prices fell 1.3% during the month, but are still 7.5% higher than a year ago);
• for durable goods (cars — only 1.7% instead of 3.1% in August, and prices for furniture [-4.6%] and household appliances [-2.3%] continued their year-on-year decline in September).

What it will affect

Inflation has been steady in recent months, rising in July and August after hitting a low of 2.8% in June. The Bank of Canada has expressed concern that annual inflation may be stuck above the central bank's 2% target.

On October 25, the central bank will make its next interest rate decision. This report from Statistics Canada will be the last publication it can take into account before making a decision. According to experts, the likelihood of another rate hike is now greatly reduced.