Recent upward revisions to Canada’s 2026 inflation outlook stem primarily from elevated energy prices tied to the Middle East conflict, which have kept headline CPI at 3.0% year-over-year through August. Economists now project the CPI averaging around 3% over the coming months, with the return to the Bank of Canada’s 2% target delayed until the third quarter of 2027. Core measures excluding gasoline remain nearer 2%, while the central bank holds its policy rate at 2.25% amid rising hike expectations ahead of the October decision and September CPI release on October 19. Trader sentiment on Polymarket, favoring the 3.0–3.9% range, reflects these persistent cost pressures and oil-price volatility against offsetting factors like subdued shelter and services inflation.
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