Canada Economics Comment Headline and Core Inflation In Line With Expectations

Economics Research 14 September 2026 | 3:12PM BST

Canada Economics Comment: Headline and Core Inflation In Line With Expectations

BOTTOM LINE: Headline CPI increased by +3.0% yoy in August, in line with Megan Peters | consensus expectations. The average of the preferred measures (CPI-Median and Goldman Sachs International CPI-Trim) was unchanged at +2.0%, with both CPI-Trim and CPI-Median in line with expectations. Excluding food and energy, monthly inflation moved sideways at +0.3% in August, reflecting firmer services inflation—led by travel services, intercity transportation and communications—but softer goods. Monthly services inflation ticked up to +0.4% in August (vs. +0.3% in July, mom top-down GS sa), although we estimate that sequential inflation for non-shelter wage-sensitive categories slowed to +0.0% (vs. +0.3%), while sequential core goods inflation slowed to -0.1% (vs. +0.1%). While the preferred core measures continue to paint a benign inflation picture, exclusion core inflation has now run above the BoC’s target range on a monthly annualized basis for the past four months. We continue to expect the BoC will remain on hold for the rest of the year, but today’s data combined with the BoC’s hawkish pivot at its September meeting leave a hike in October or December as a possibility if inflation data show further signs of firming next month.

CPI (yoy) +3.0% for August, median forecast +3.0%, GS +3.0%, prior +3.0%

CPI ex food and energy (yoy) +2.1% for August, median forecast +2.1%, GS +2.0%, prior +1.9%

CPI-Trim (yoy) +1.9% for August, median forecast +1.9%, prior +1.9%

CPI-Median (yoy) +2.0% for August, median forecast +2.0%, prior +2.0%

CPI (mom sa) +0.2% August, prior revised +0.2%

CPI ex food and energy (mom sa) +0.3% for August, prior +0.3%

1. Headline CPI increased by +3.0% yoy in August, in line with consensus expectations. Inflation slowed on a year-over-year basis for five out of eight major categories. The largest declines were in clothing and footwear (-1.2pp to +1.2%), alcohol and tobacco (-0.3pp to +1.7%), and transportation (-0.3pp to +7.5%). Year-over-year inflation in the recreation category continued to climb (+1.2pp to +5.6%), reflecting elevated inflation for travel services (+18.3%, despite the end of the World Cup in July), computer equipment, software and supplies (+8.9%) and fuel, parts and accessories for RVs (+19.7%, reflecting higher energy prices). Excluding food and energy, CPI inflation ticked up to +2.1% in August (vs. +1.9% in July), in line with consensus expectations. On a year-over-year basis, CPI-Trim and CPI-Median

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Goldman Sachs Canada Economics Comment

were unchanged at +1.9% and +2.0%, respectively, both in line with consensus expectations.

2. On a three-month average annualized basis, CPI-Trim was unchanged at +2.2%, while CPI-Median ticked up by 0.4pp to +2.2%. On a month-over-month annualized basis, CPI-Trim and CPI-Median were unchanged at +2.8% and +2.7%, respectively.

3. On a seasonally adjusted monthly basis, CPI inflation slowed in five out of eight major categories. The largest declines were in transportation (-0.5pp to +0.2%, largely reflecting lower gasoline prices, which offset firmer inflation for intercity transportation), clothing (-0.5pp to -0.4%) and alcohol and tobacco (-0.3pp to -0.1%). Monthly inflation accelerated in the shelter (+0.2pp to +0.3%) and recreation (+0.1pp to +0.7%) categories. Seasonally adjusted monthly CPIX inflation, which excludes eight of the most volatile components and the effect of indirect tax changes, was unchanged at +0.3%.

4. Sequential services inflation edged up to +0.4% in August (mom top-down GS sa), reflecting strength in travel services (+3.3%), intercity transportation (+1.9%) and communications (+1.5%), as well as firmer shelter inflation. Within shelter, rental costs increased by 0.8% and mortgage interest costs increased by 0.3%, but homeowners’ replacement costs edged down by 0.1%. Sequential core goods inflation slowed by 0.2pp to -0.1% in…