Canada's inflation cools more than expected, easing pressure on the Bank of Canada

2023-10-22

Inflation cooled to 3.8 per cent nationally last month, Statistics Canada said Tuesday, down from 4.0 per cent in August and snapping a streak of two consecutive monthly accelerations.

The annual rate of inflation saw a “broad-based” slowdown in September amid signs of continuing relief at the grocery store, the agency said.

StatCan said Canadians saw prices at the grocery store rise 5.8 per cent in September, cooling from the 6.9 per cent increase in August.

Price growth for meat, dairy products, vegetables and coffee and tea all decelerated month-to-month, though edible fats and oils, bakery products, fish and fresh fruit saw costs rise quicker.

Mike von Massow, a food economist with the University of Guelph, told Global News on Tuesday that the easing in price growth at the grocery store was largely foreseen — and it’s a trend he expects to continue.

 

Months of higher grocery price hikes from last year are falling out of the annual inflation comparison, he notes, and food costs tend to cool in the late summer and early fall months.

“There’s still room for things to upset the apple cart, but overall, I’m optimistic that we will continue to see food inflation come down and perhaps even see one more month of price decreases, and that that will make it a little easier we get into the holiday season,” von Massow said.

 

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There are still risks that could drive prices up on individual baskets of goods, such as concerns about a repeat of last year’s disease in California crops such as lettuce, von Massow noted, but those impacts won’t hit consumers as hard as the “perfect storm” Canadians faced at the grocery store this past year.

One of the most significant drivers of food inflation has been Russia’s invasion of Ukraine — a region known colloquially as the world’s bread basket — which disrupted flows of goods and drove up prices for wheat and other commodities.

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