| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| CPI - M/M | -0.3% | -0.4% to -0.1% | -0.4% | -0.2% | -0.2% |
| CPI - Y/Y | 1.9% | 1.7% to 2.0% | 1.6% | 2.0% | 2.0% |
| Core CPI - M/M | -0.1% | -0.1% | -0.1% | ||
| Core CPI - Y/Y | 2.4% | 2.4% | 2.4% |
Highlights
Canada's Consumer Price Index fell 0.4 percent in September on a monthly basis, after a 0.2 percent decline in August. On a seasonally adjusted monthly basis, the CPI is unchanged in September.
Compared to September 2023, the CPI is up 1.6 percent, down from a 2 percent gain in August. This is the smallest yearly increase since February 2021 (+1.1 percent).
The main contributor to overall deceleration in consumer prices was lower prices for gasoline. Compared to a year ago, gasoline prices fell 10.7 percent in September compared with August's decline of 5.1 percent.
On a monthly basis, gasoline prices are down 7.1 percent in September following a 2.6 percent decline in August.
Excluding food and energy prices, the CPI declined 0.1 percent on a monthly basis, the same as in August. Compared to a year ago, the core CPI is up 2.4 percent in September, the same rate of increase as in August.
The average of the Bank of Canada's 'Alternative measures' of annual core inflation for September is 2.3 percent.
Compared to September 2023, the CPI is up 1.6 percent, down from a 2 percent gain in August. This is the smallest yearly increase since February 2021 (+1.1 percent).
The main contributor to overall deceleration in consumer prices was lower prices for gasoline. Compared to a year ago, gasoline prices fell 10.7 percent in September compared with August's decline of 5.1 percent.
On a monthly basis, gasoline prices are down 7.1 percent in September following a 2.6 percent decline in August.
Excluding food and energy prices, the CPI declined 0.1 percent on a monthly basis, the same as in August. Compared to a year ago, the core CPI is up 2.4 percent in September, the same rate of increase as in August.
The average of the Bank of Canada's 'Alternative measures' of annual core inflation for September is 2.3 percent.
Market Consensus Before Announcement
Declining energy prices are expected to depress Canada's annual headline inflation rate below 2 percent in September CPI is seen down 0.3 percent on the month and up 1.9 percent on the year.
Definition
The Consumer Price Index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI provide widely used measures of inflation. The policy target measure for the Bank of Canada (BoC), the annual CPI rate can be distorted by swings in the more volatile subsectors so the central bank also monitors an adjusted measure of the CPI that excludes a range of volatile categories in order to get a better handle on underlying trends.
Description
The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as Canada, where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
As the most important indicator of inflation the CPI is closely followed by the Bank of Canada. The Bank of Canada has an inflation target range of 1 percent to 3 percent but focuses on the 2 percent midpoint. It uses the CPI and three measures of the underlying rate as the prime inflation indicators. Markets also look at core rate which excludes food and energy.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
As the most important indicator of inflation the CPI is closely followed by the Bank of Canada. The Bank of Canada has an inflation target range of 1 percent to 3 percent but focuses on the 2 percent midpoint. It uses the CPI and three measures of the underlying rate as the prime inflation indicators. Markets also look at core rate which excludes food and energy.
