Canadian inflation didn’t get worse—unless you live in the majority of provinces. Statistics Canada (StatCan) data shows inflation stalled in August, with slowing gas prices helping to calm growth. While national growth stalled at the Bank of Canada’s critical upper threshold, that would be considered slow in most of the country. A provincial breakdown shows most provinces are significantly above the national average, especially in Atlantic Canada.
Canadian Headline CPI Stalls, Remains At BoC Upper Tolerance
CPI annual growth rate.
Source: StatCan.
Headline inflation remained flat at 3.0% annual growth reported in August, unchanged from July. Most of the climb in recent months has been attributed to gas prices, and the slight deceleration helped to slow the march beyond 3.0%. However, CPI excluding gasoline’s annual growth accelerated to 2.4% in August from 2.2% a month before. That’s still relatively tame growth, but it indicates the upward pressure on prices is broadening.
The main driver of CPI’s annual growth continues to be gasoline (+22.8%), where growth remains lofty despite the slowdown. It was followed by Travel Tours (+26.1%), and rent (+2.8%), rounding out the top 3. Rent was also the top contributor to the monthly move, rising 0.8% in August alone. In other words, the third-biggest driver of inflation over the past year saw more than a quarter (28.6%) of its growth in a single-month. That doesn’t speak well for a country that’s already struggling to contain rising housing costs.
Keeping inflation in check over the past year has been the cost of owning a home. According to the agency, homeowners’ replacement costs (-1.9%) was the biggest downward pressure, based largely on new home prices. It was followed by household appliances (-5.5%), and other owned accommodation expenses (-1.6%) rounding out the top downward pressures in the past year.
Shelter is the driver of inflationary and deflationary pressures. As a result, its distribution follows the diverging provincial real estate markets.
Atlantic Canada Leads Inflation Growth, Most Provinces Accelerated
Annual inflation growth by province and the national average.
Source: StatCan; Better Dwelling.
Most provinces may be a little skeptical of the national stability, and with good reason—inflation is accelerating. Annual growth accelerated in 6 of 10 provinces despite Canada’s headline average being flat. Ontario (+2.4%) was the only province below the 3.0% national rate, while B.C. (+3.0%) matched it exactly. The other 8 provinces exceeded the national rate, suggesting the national numbers are masking the pain felt across most of the country—especially in Atlantic Canada.
Headline CPI is rising much faster in Atlantic Canada, where CPI is rising at a level that would be seen as a crisis if it were national. Nova Scotia (+5.1%) has seen the highest growth across the country, followed by New Brunswick (+4.6%), and PEI (+4.4%), tied with Manitoba (+4.4%) for the third-biggest move.
To put that in context, purchasing power is cut in half every 35 years at the Bank of Canada’s 2% target rate. At Nova Scotia’s current rate, purchasing power would be slashed in half in just over 14 years.
Circling back to rents suddenly returning to one of the highest drivers of growth is interesting. Atlantic provinces also happened to lead in quarterly rental price growth, representing virtually all of the upward pressure on the Q2 2026 report.
