Inflation Eases to 3.8% in September, Allowing Bank of Canada to Pause Interest Rate Hikes

Inflation edged down to 3.8% in September, easing price pressures and setting the stage for the Bank of Canada to hold interest rates steady next week.

Grocery, rent, restaurant food, gas, and electricity costs drove inflation up, while phone, natural gas, air travel, childcare, and furniture prices helped pull it down.

Economists say the data allows the Bank of Canada to pause rate hikes and wait for inflation to keep falling from the current 5% level.

The central bank is trying not to overdo rate hikes as economic growth slows, but wants to see inflation consistently at the 2% target.

Interest rate hikes take 1-2 years to fully impact the economy, so their effect will keep curbing inflation even if the Bank pauses increases.