OTTAWA, Oct 15 - Canada's annual inflation rate decreased to 1.6% in September, down from 2.0% in August, primarily due to a significant drop in gasoline prices, according to Statistics Canada.
Analysts had anticipated a slower decline to 1.8%. The consumer price index (CPI) fell by 0.4% month-over-month, contrasting with a forecasted decrease of 0.2%. The decline in gasoline prices, which dropped by 10.7%, marked the most considerable decrease since July 2023.
This reduction in energy prices has contributed to a faster-than-expected slowdown in inflation, prompting speculation about a potential 50 basis-point interest rate cut by the Bank of Canada at its upcoming meeting on October 23.
The Canadian dollar weakened to a 10-week low against the U.S. dollar following the release of the inflation data, trading at 1.3833 or 72.29 U.S. cents. Excluding gasoline, the inflation rate remained steady at 2.2%.
Core inflation measures, including the CPI-median and CPI-trim, held at 2.3% and 2.4%, respectively. The inflation rate for shelter prices decreased slightly to 5.0% from 5.3% in August, while goods prices fell by 1.0% annually, and services prices increased by 4.0%.