Canada’s inflation rate is expected to remain elevated when new figures are released next week, but economists are divided over whether rising energy costs will fuel broader price increases.
asserted
costs → expect → increases
Statistics Canada will release its October consumer price index report Monday.
asserted
Canada → release → report
The monthly report tracks changes in the cost of goods and services typically purchased by Canadian households, offering a snapshot of how prices are affecting consumers’ purchasing power.
asserted
prices → track → power
The annual inflation rate rose to 3.1 per cent in September as war in the Middle East continued to drive up gasoline prices.
asserted
war → rise → prices
The big question among economists now isn’t just how high inflation has climbed but whether rising energy costs will push up prices across the economy, keeping inflation elevated for longer and potentially prompting further interest rate hikes.
asserted
costs → climb → hikes
LJ Valencia, an economist with Desjardins Economics, says persistently high energy costs risk driving up prices more broadly.
asserted
costs → say → prices
He says he expects October inflation to be “similar or perhaps slightly higher” than September.
asserted
inflation → say → September
Valencia says businesses have largely shielded consumers from rising energy costs so far, but their ability to continue absorbing those increases is limited.
asserted
ability → say → increases
“At some point, they’re going to start passing on these higher costs to consumers,” he said.
asserted
he → go → consumers
Yet CIBC Capital Markets says higher business costs won’t necessarily translate into higher consumer prices.
asserted
costs → say → prices
In a client note, economists Avery Shenfeld and Helen Lao said manufacturers, wholesalers and retailers are indeed facing sharply higher input costs.
asserted
manufacturers → say → costs
But they argue that passing those costs on to consumers could cause enough “sticker shock” to hurt demand, forcing businesses to cut prices again to maintain sales.
uncertain
passing → argue → sales
They say weak consumer demand and relatively healthy profit margins among wholesalers and retailers mean “those margins, rather than consumers, will bear a significant share of the burden of higher costs.”
asserted
margins → say → costs
“If so, the implication is that inflation will not escalate nearly as much as (the Bank of Canada) expects, leaving less urgency for further rate hikes ahead,” the CIBC economists said.
asserted
economists → escalate → hikes
The Bank of Canada expects inflation to remain above three per cent through much of 2027.
asserted
inflation → expect → 2027
The central bank aims to keep inflation at two per cent, the midpoint of its target range of one to three per cent.
asserted
bank → aim → cent
It can raise interest rates to curb borrowing and spending when inflation is too high or lower rates to encourage economic activity when inflation is weak.
asserted
inflation → raise → activity
On Oct. 28, the bank raised its key interest rate by a quarter of a percentage point to 2.5 per cent, its first increase in more than three years, amid concerns that higher energy costs could fuel broader inflation.
uncertain
costs → raise → inflation
With the Bank of Canada signalling further rate hikes may be needed, inflation figures are being closely watched for clues about its next move.
Its decisions affect everything from mortgage payments and consumer spending to business investments.
uncertain
decisions → signal → investments
Meanwhile, RBC economist Salim Zanzana said in a research note that while energy prices are driving inflation, the impact varies widely across the country.
asserted
impact → say → country
He said higher energy costs are hitting Atlantic Canada particularly hard because home heating oil is more widely used in the region, while inflation remains lower in provinces like Ontario and British Columbia where economic conditions are weaker.
asserted
conditions → say → Ontario
“While higher rates may help contain inflation in regions where price pressures have been more persistent, they could also compound economic challenges elsewhere where inflation is less problematic, for example in Ontario and B.C.,” Zanzana said.
uncertain
Zanzana → help → Ontario
This report by The Canadian Press was first published Nov. 13, 2026.
asserted
report → publish → Press
The Aporia
