Canadian inflation may look cooler on paper, but you’re forgiven if you have a hard time seeing it in reality. Statistics Canada (StatCan) reported the headline Consumer Price Index (CPI) slowed in October, entirely due to falling gas prices. Excluding gas, inflation was unchanged—while core measures remained at the upper bound of the central bank’s target. The biggest cost pressure came from shelter: soaring rents and a sharp jump in property taxes.
Canadian Headline Inflation Flat—Only Due To Cheaper Gas
Source: StatCan.
Canada’s annual headline inflation rate eased to 2.2% in October, down from 2.4% in September. The drop was entirely due to gas (-9.4%), shaving 0.3 points off the headline CPI despite accounting for just over 3% of the basket. Strip out gas, and inflation was unchanged at 2.6%.
The Bank of Canada’s (BoC) preferred core measures showed no real improvement. CPI-trim (+3.0%), CPI-median (+2.9%), and CPI-common (+2.7%) all remained close to the 3% upper limit of the BoC’s tolerance range.
Rents Are Still Rising At Nearly 3x Target Inflation
Shelter remained one of the biggest sources of inflation pressure in October. Rent climbed 5.2% year-over-year, accelerating from 4.9% in September. On a monthly basis, unadjusted rent jumped 1.0%, accounting for a significant share of the CPI increase—half the annual target in just one month.
Homeowners See Aggressive Surge In Mortgage Costs Despite Cuts
Homeowners weren’t spared from rising shelter costs last month. Mortgage interest rose 2.9% year-over-year, making it one of the more persistent drivers of inflation. That may appear at odds with the BoC’s recent cuts—but those cuts are driving medium-term inflation expectations higher, adding pressure instead of relief to fixed rates.
Canadian Property Taxes Surge, Led By Manitoba’s 19.5% Jump
Source: StatCan.
Once a year the inflation fairies calculate property taxes in October, and this year they were way too generous—providing the single biggest driver of the month’s CPI growth. StatCan reported a 5.6% increase, down slightly from the 6.0% reported last year, but still nearly triple the inflation target. Manitoba led the surge with a 19.5% jump, driven by rising sewer and waste management fees following years of deferred upgrades.
Homeowners also saw insurance costs climb. Home and mortgage insurance rose 6.8% in October, led by Alberta’s 13.7% spike. The surge in Alberta appears to be driven by regional risks, as the province also posted a 17.8% increase in auto insurance, more than double the national average of 7.3%.
Despite headline CPI easing, pressures remain broad—especially when it comes to the most expensive items. The BoC justified its rate cuts with expectations of rising unemployment taming inflation. The blowout job data reported shortly after their last cut complicates that narrative, and raises the risk of renewed price acceleration.