Canada’s annual inflation rate climbed to 3.1% in September, up from 3.0% in August, as a sharp increase in gasoline and other energy prices drove consumer costs higher, according to data released Monday by Statistics Canada. The latest figure puts inflation above the Bank of Canada’s 1% to 3% target range ahead of its next monetary policy decision.

Gasoline prices rose 27.8% compared with September 2025, accelerating from the 22.8% annual increase recorded in August. Overall energy prices climbed 19% year over year, up from 15.4% the previous month. Fuel oil and other fuels saw an even steeper increase of 57.8%, placing additional pressure on households that rely on oil for heating.

The overall Consumer Price Index increased 0.1% from August to September. However, excluding gasoline, annual inflation eased to 2.2%, down from 2.4% in August, suggesting that higher fuel costs were the main driver of the headline increase.

Grocery price increases continued to slow. Food purchased from stores rose 1.7% year over year, the smallest increase since May 2024. Prices for fresh vegetables fell 2.9%, while sugar and confectionery products declined 2.7%. Beef prices continued to rise, increasing 8.7% annually, although that pace was slower than August’s 11% increase. Despite the recent moderation, grocery prices have risen 33% since September 2020.

Housing-related costs also moved higher. Shelter prices increased 1.8% year over year, compared with 1.5% in August, while rent prices rose 2.8%. Homeowners’ insurance and maintenance costs contributed to the increase, adding to the financial pressures facing Canadian households.

The September report is the final inflation reading before the Bank of Canada’s next interest-rate announcement later this month. While higher fuel prices have pushed the headline rate above the central bank’s target ceiling, the slowdown in inflation excluding gasoline may complicate decisions about whether further monetary tightening is necessary.