🇨🇦❗️Cable FX Macro Weekly Note: Canada Inflation Rate

**As seen in Risk In The Week report 10/17/25, get full access now!

Canada's headline inflation remains subdued but ticked up slightly in August amid moderating energy price declines and persistent pressures in shelter and services. The Bank of Canada targets 2% inflation, and these figures show the economy is approaching that goal, though core measures are a bit stickier. Headline CPI rose 1.9% Y/y (up from 1.7% in July), driven by slower declines in gasoline prices. On a monthly basis, CPI increased 0.2%. The BoC measures, CPI trimmed rose 2.8%, median increased by 3.0%, common ticked at 2.7%. Shelter was the largest contributor, up 5.2% Y/y in August, fueled by rent (+6.1%) and mortgage interest (+7.5%). This reflects ongoing housing market tightness despite BoC rate cuts.

Economists at RBC expect the headline to rise to 2.3% year- over-year, with core measures around 3.1%, as tariff pass- through effects on imported goods emerge and energy declines slow further. This could influence the BoC's next rate decision on October 29, 2025. RBC assigned a 70% chance of a BoC rate cut this month, they added that the central bank appears in a precautionary cutting phase with monetary maneuvers providing a bridge until fiscal stimulus takes over.