Economists expect annual inflation rate fell in October, driven by lower gas prices

A person pumps fuel in Toronto, on Wednesday, September 12, 2012. THE CANADIAN PRESS/Michelle Siu

TORONTO — Economists expect October’s annual inflation reading will show an easing from September as lower gasoline prices helped offset increases elsewhere.

Statistics Canada is set to report inflation figures for last month on Monday, a change from its usual Tuesday release.

A Reuters poll of economists ahead of the release predicts annual inflation fell to 2.1 per cent in October, according to LSEG Data & Analytics. Annual inflation was 2.4 per cent in September.

RBC said the decline is expected in part because gasoline prices were down five per cent in October, while food price inflation should remain around 3.8 per cent.

Nathan Janzen, assistant chief economist at RBC, said the inflation data is still being tamped down by the removal of the carbon tax earlier this year, while consumer spending is putting upward pressure on inflation.

He said the trade dispute is likely having an effect — despite Canada lifting most counter-tariffs, U.S. levies on other countries could be causing the prices of imports to rise.

“Canadian imports are not being directly taxed when they cross the border, but you can still have some spillover from broader U.S. tariff policy.”

Consumer spending is likely putting on more pressure though, said Janzen.

“The bigger factor that we’ve been watching, and I think that the Bank of Canada is paying attention to as well, is just the consumer demand in Canada has been quite resilient.”

Usually, when unemployment is as high as it is now at around seven per cent, it would ease pressure on inflation as spending slows.

But that isn’t happening.

“It’s that consumer demand relative to available supply that really is ultimately the driver of consumer prices,” he said.

The disconnect can be explained in part by the rise in unemployment being driven more by those entering the market, such as recent graduates, rather than layoffs at more senior levels, said Janzen.

While household spending is keeping some upward pressure, Desjardins said the removal of counter-tariffs should continue to filter through to lower consumer prices in the coming months.

Service inflation remains sticky, but goods inflation outside of food and energy are already trending lower, Desjardins economists noted.

This report by The Canadian Press was first published Nov. 14, 2025.

Ian Bickis, The Canadian Press