September Inflation Just 1.6%
Inflation just fell to 1.6% - does this mean the fight against inflation is over?
The fight against inflation appears to be have been won — with the September inflation rate sitting at a very modest 1.6%, we’re experiencing the slowest price growth since February 2021. The current rate is also comfortably below the Bank of Canada’s target of 2%, signaling that inflation is under control, and a brighter economic outlook could be ahead.
Why Inflation Is Slowing Down
A big part of this easing comes from several key factors reshaping the Canadian economy:
Lower Gasoline Prices: Saudi Arabia is set to increase its oil production, pushing down fuel costs across the globe. This is great news for businesses and consumers alike, as transportation and energy costs shrink.
Rents Are Dropping: Across most of Canada’s major cities, rental prices are declining in response to the decrease in foreign students.
Housing Prices Are Falling: After a rapid surge in housing prices, we’re seeing a cool-down in real estate across many parts of the country, providing potential opportunities for both homebuyers and investors as prices become more affordable.
Mortgage Expenses Are Stabilizing: While many Canadians are still renewing mortgages at higher rates throughout 2025, those on variable-rate mortgages are starting to see relief. With each interest rate cut, their payments become more manageable.
Deflation: The inflation trend is down and the risks of deflation are now more likely than a resurgence of inflation.
The Road Ahead: More Interest Rate Cuts Are Coming
Next week, all eyes will be on the Bank of Canada’s upcoming meeting on October 23. Predictions about whether we’ll see a 0.5% interest rate cut have been swirling, and it’s looking more like a sure thing. If this happens, the Bank of Canada’s rate will drop to 3.75% - some much needed relief.
But this won’t be the last cut—there’s a strong likelihood of another reduction in December, followed by more in 2025. The Bank of Canada will need to do everything it can to stimulate the economy further as things continue to cool down, bringing even more relief to Canadian households.
What Does This Mean for You?
If you’re thinking about getting a mortgage, now might be the time to seriously consider going with a variable-rate mortgage. With interest rates poised to drop further by year’s end, you could save significantly. And when rates eventually stabilize, locking into a fixed rate next year could be a smart long-term strategy.
► Contact me if you need a referral to a mortgage broker to help you determine the best option for you.
In the fight against inflation, it seems Canada has turned the tide—and the effects will be felt across the economy. Now is the time to make the most of these opportunities and position yourself for future financial success.
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