Canada Economics Comment

Latest edition · September 14, 2026

Canada Economics Comment Headline and Core Inflation In Line With Expectations

Canada's August headline CPI rose 3.0% yoy and core measures matched expectations, with CPI-Trim at 1.9% and CPI-Median at 2.0%. Goldman Sachs continues to expect the Bank of Canada to remain on hold through year-end, though an October or December hike remains possible if inflation firms further.

Canada's August inflation data met consensus expectations across headline and core gauges, with headline CPI up +3.0% yoy and the average of the BoC's preferred measures steady at +2.0% yoy (CPI-Trim at 1.9% and CPI-Median at 2.0%). Underlying details showed firmer services inflation at +0.4% mom driven by travel, transport, and communications, offset by softer core goods prices (-0.1% mom) and flat non-shelter wage-sensitive components. While preferred core metrics reflect a benign environment, exclusion core inflation has exceeded the BoC's target range on a monthly annualized basis for four straight months. Consequently, while Goldman Sachs expects the BoC to remain on hold through 2026, an October or December rate hike remains on the table if next month's data show continued firming.

Key takeaways from the latest edition

• 1.Headline CPI rose 3.0% yoy in August and the preferred core measures (CPI-Median and CPI-Trim) averaged an unchanged 2.0% yoy, exactly in line with consensus forecasts.
• 2.Exclusion core inflation (CPI excluding food and energy) moved sideways at +0.3% mom and ticked up to +2.1% yoy, exceeding the Bank of Canada's target range on an annualized monthly basis for four consecutive months.
• 3.Goldman Sachs maintains its baseline expectation that the Bank of Canada will remain on hold for the rest of 2026, though a rate hike in October or December remains possible if inflation firms further next month.

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Edition archive

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