What is it?
Inflation is how much the prices of the goods and services we buy have risen compared with a year ago, in percent. As a made-up example, at 3%, a basket of shopping that cost $100 a year ago costs about $103 now, on average.
In Canada, Statistics Canada publishes the consumer price index (CPI) every month. The CPI measures the prices of a set of things Canadians usually buy, such as food, housing, transportation, furniture, clothing and recreation. When the news talks about “inflation,” it usually means how much the CPI has risen from a year ago.
The Bank of Canada’s target
- The Bank of Canada aims to keep inflation at 2%. The target range is 1% to 3%, and 2% is the middle.
- The target is measured as the year-over-year increase in total CPI.
- The Bank also watches “core” inflation, which looks past short-term jumps. Since January 2017 its preferred measures are CPI-trim, CPI-median and CPI-common.
- If inflation looks set to stay above target, the Bank tends to raise its policy rate; if it looks set to fall well below, it tends to lower it.
Recent numbers (fall 2026)
| Item | Figure |
|---|---|
| Total CPI inflation, September 2026 (year over year) | 3.1% |
| CPI inflation since April (the Bank’s description) | about 3% |
| Expected by year-end (the Bank, November 3, 2026) | about 3.5% |
| When it returns close to 2% (the Bank’s projection) | middle of 2028 |
The projections are the Bank of Canada’s and can change. Check Statistics Canada and Bank of Canada releases for the latest numbers.
What does it have to do with housing?
- Policy rate: when inflation is high, the Bank may raise its rate, and prime rates and variable-rate mortgages go up with it. The Bank said its October 28, 2026 increase was to reduce the risk that high energy prices spread to other prices.
- Fixed rates: bond yields react to the inflation outlook, so fixed-rate mortgages are affected indirectly.
- Rent: Ontario’s yearly rent increase guideline is based on Ontario CPI, but the law caps it at 2.5%.
- Higher prices raise living costs, which can also affect how much a lender thinks you can afford.
What the law and official sources say
Quotes are copied word for word. The "In plain words" lines are our explanation, not an official translation.
The Bank of Canada aims to keep inflation at the 2 per cent midpoint of an inflation-control target range of 1 to 3 per cent. The inflation target is expressed as the year-over-year increase in the total consumer price index (CPI).In plain wordsThe Bank aims for 2% inflation, the middle of a 1% to 3% range, measured as the year-over-year rise in total CPI.
Source: bankofcanada.ca/core-functions/monetary-policy/inflation/ · checked Nov 4, 2026
CPI inflation has been around 3% since April and is expected to rise to about 3½% by year-end. Inflation is projected to remain at or above 3% through much of 2027 before returning close to the 2% target by the middle of 2028.In plain wordsCPI inflation has been about 3% since April and should rise to about 3.5% by year-end, then stay at or above 3% through much of 2027 before getting close to 2% by the middle of 2028.
Source: bankofcanada.ca/2026/11/opening-statement-house-commons-standing-committee-finance-2026-11-03/ · checked Nov 4, 2026
Common questions
Does the policy rate always go up when inflation rises?
Not always. The Bank looks at how long inflation is likely to stay high and how strong the economy is. In October 2026 it said it raised the rate because the inflation outlook got worse while the economy held up.
What is the difference between total CPI and core inflation?
Total CPI includes everything. Core measures filter out items that jump around a lot, like fuel, to show the underlying trend. The Bank’s target is measured with total CPI.
Where can I find inflation numbers?
Statistics Canada publishes the consumer price index every month, and the Bank of Canada’s CPI page also lists the figures.
Guides that use this term
Sources checked
- Bank of Canada, Inflation · checked Nov 4, 2026
- Bank of Canada, Consumer price index table (September 2026: 3.1%) · checked Nov 4, 2026
- Bank of Canada, opening statement to the House of Commons Standing Committee on Finance (November 3, 2026) · checked Nov 4, 2026