Inflation Climbs to 2.4% in September Driven by Gas and Grocery Costs

Inflation in Canada has increased to 2.4% for September 2025, as reported by Statistics Canada on Tuesday. This marks a rise of half a percentage point from 1.9% in August, surpassing economists’ expectations. The primary contributors to this increase are annual fluctuations in gas prices and ongoing pressure on grocery costs.

Gasoline prices have shown a year-over-year decline largely due to the elimination of the consumer carbon price. Nonetheless, there was a modest uptick in prices at the pumps from August to September. With a smaller decrease in gas prices compared to previous months, these changes provided a boost to the overall inflation figures.

Grocery prices remain a significant concern for consumers. Fresh vegetable costs increased by 1.9% year-over-year in September, following a drop the previous month. Additionally, prices for sugar and confectionery items jumped by 9.2%, a notable rise from 5.8% in August. According to Statistics Canada, the overall trend for grocery price increases has been upward since reaching a low in April 2024. Supply shortages, particularly in beef and coffee, continue to drive prices higher.

Impact on Rent and Travel Costs

In September, national rent prices rose to 4.8% year over year, up from 4.5% in August. Renters have generally experienced a deceleration in price increases over the past year, although there have been instances of monthly fluctuations.

Interestingly, travel tours also experienced a rare month-over-month price increase in September, attributed to higher hotel costs linked to major events in Europe and parts of the United States.

Despite some upward pressures, smaller annual increases in clothing and footwear prices helped temper the overall inflation figures. The latest inflation report will serve as the final overview for the Bank of Canada before its next interest rate decision, scheduled for October 29, 2025. The central bank’s preferred core inflation measures remain stubbornly above the 3% threshold, even as policymakers express concerns about the reliability of these metrics.

This report highlights ongoing economic challenges that consumers face, particularly in essential areas like fuel and food, as inflationary pressures continue to shape spending patterns across Canada.