Inflation holds steady in Canada — but grocery and rent costs are still squeezing households

This is good news for anyone suffering with higher living costs, given that Canada's inflation had been ticking up in September — the first acceleration in headline inflation since May.

Grocery prices remain a key pain point

Food prices continue to be one of the clearest stress points in the inflation picture. Grocery costs rose about 4.7% year over year, outpacing headline inflation and marking one of the fastest increases among major CPI components.

Statistics Canada data show higher prices for fresh fruit, vegetables and prepared foods were among the main contributors. Supply constraints, transportation costs and labour pressures have kept food inflation elevated even as broader inflation trends moderate.

Economists say food prices tend to cool more slowly than other categories, meaning consumers often feel the impact of inflation long after headline numbers improve.

Shelter costs stay elevated — but show signs of stabilizing

Shelter remains the largest and most persistent driver of inflation. Overall shelter costs rose about 2.3% year over year, reflecting slower — but still elevated — price growth compared with earlier in the year.

Rent growth remains uneven across the country. While some provinces have seen cooling, tight rental markets in major urban centres continue to push prices higher for many tenants. The result is a shelter category that no longer spikes month to month but remains structurally sticky, particularly for renters and recent homebuyers.

Mortgage interest costs, while no longer surging at the same pace as in 2023, continue to weigh heavily on homeowners renewing at higher rates.

Energy prices offer limited relief

Energy prices, including gasoline, have been less volatile in recent months and are no longer the dominant force shaping inflation. The fading of last year’s base-year effects has reduced sharp swings in fuel prices, helping keep headline inflation stable.

That moderation has helped offset continued pressure from food and shelter — but economists caution that energy alone cannot deliver meaningful relief if core inflation remains elevated.

Inflation remains within target — but above the comfort zone

Despite the stabilization, inflation still sits above the Bank of Canada’s preferred 2% midpoint, keeping policymakers cautious.

“Food prices are volatile in Canada, so I wouldn’t read too much into any one month,” said Nathan Janzen, assistant chief economist at RBC, in an interview with CBC News. “But food price growth has been sticky, and this has been a persistent phenomenon in recent years.”