Canadian inflation edges higher on energy as underlying pressures remain contained
Canada’s Consumer Price Index (CPI) rose 3.1% from a year earlier in September, up from 3.0% in each of the prior two months but slightly below expectations. Higher gasoline and furnace oil prices drove the increase, with the effect most visible in oil-sensitive transportation categories such as airfares. Food inflation continued to cool, with grocery prices rising at their slowest pace since May 2024. Underlying inflation stayed contained: CPI excluding food and energy held at 2.1%, and the Bank of Canada’s (BoC) preferred core measures averaged 1.9%.
Why this matters: The report shows that higher energy prices have so far spread only modestly into broader consumer prices, though there are early signs of wider pressure. That leaves the BoC balancing a soft economy, with employment falling in both August and September, against the risk that persistently elevated oil prices lift inflation expectations. BoC Governor Tiff Macklem recently acknowledged that the risk of broader, more persistent inflation has risen, making it harder to look through higher energy costs. The BoC’s next policy decision is scheduled for October 28.
U.S. reshuffles tariffs on Canadian goods as trade deal timeline remains uncertain
The U.S. revised the list of Canadian goods subject to its 50% tariffs. It removed items such as certain plywood, packaging materials, agricultural equipment and seaweed, while adding others, including vinyl flooring, carpets, valves and a range of household products. The changes take effect October 30. The tariffs were first imposed in August after trade talks broke down, prompting Canada to respond with counter-tariffs on U.S. imports. Prime Minister Mark Carney and U.S. President Donald Trump also discussed trade during the week, though reports suggest a broader agreement is unlikely before the U.S. midterm elections on November 3.
Why this matters: The changes reshuffle rather than reduce the overall tariff burden, with more products added than removed, and trade experts expect a modest near-term economic impact. Still, the absence of a broader agreement keeps uncertainty elevated for Canadian businesses at a time when the economy remains soft. Any progress toward a deal, or further escalation, could be reflected in the Canadian dollar and trade-sensitive sectors, while the midterm results may shape the timing and direction of future negotiations.
| Index† | Change (%) | Index Level | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| Treasury Bill | 0.03 | 0.14 | 1.81 | 2.26 | 194 |
| Canadian Bonds | 0.00 | 1.17 | 0.38 | -0.57 | 1,204 |
| Canadian Equities | -1.07 | 1.64 | 14.85 | 21.28 | 35,788 |
| U.S. Equities | -0.46 | -0.31 | 12.38 | 14.44 | 7,624 |
| International Equities | -1.51 | -1.59 | 9.15 | 12.97 | 3,074 |
| Emerging Market Equities | -2.61 | -7.37 | 14.41 | 16.78 | 1,578 |
| European Equities | -1.25 | 0.45 | 10.77 | 14.34 | 213 |
| Currencies† | Change (%) | Exchange rate | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| C$/US | 0.98 | 1.62 | -1.99 | -0.08 | 0.71 |
| C$/Euro | 1.29 | 2.79 | 2.74 | 3.61 | 0.64 |
| C$/Pound | 0.58 | 0.77 | -1.29 | -0.48 | 0.53 |
| Commodities (US$)† | Change (%) | Price | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| WTI Crude Oil ($/Barrel) | 4.29 | 16.79 | 81.43 | 72.81 | 103 |
| Gold ($/oz) | -4.14 | -4.27 | -10.88 | -7.28 | 4,008 |
Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). It is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
This document has been prepared by Scotia Global Asset Management and is provided for information purposes only. Views expressed regarding a particular investment, economy, industry or market sector should not be considered an indication of trading intent of any of the mutual funds managed by Scotia Global Asset Management. These views are not to be relied upon as investment advice nor should they be considered a recommendation to buy or sell. These views are subject to change at any time based upon markets and other conditions, and we disclaim any responsibility to update such views. Information contained in this document, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and Scotia Global Asset Management is not responsible to update this information. To the extent this document contains information or data obtained from third party sources, it is believed to be accurate and reliable as of the date of publication, but Scotia Global Asset Management does not guarantee its accuracy or reliability. Nothing in this document is or should be relied upon as a promise or representation as to the future. Investors should consult their own professional advisor for specific investment advice tailored to their needs when planning to implement an investment strategy to ensure that individual circumstances are considered properly and action is taken based on the latest available information. Scotiabank® includes The Bank of Nova Scotia and its subsidiaries and affiliates, including 1832 Asset Management L.P. and Scotia Securities Inc. Scotia Global Asset Management® is a business name used by 1832 Asset Management L.P., a limited partnership, the general partner of which is wholly owned by Scotiabank. ®Registered trademarks of The Bank of Nova Scotia, used under licence. ©Copyright 2026 The Bank of Nova Scotia. All rights reserved.
