Canadian drivers face significant financial pressure as gasoline prices jumped 27.8% in September, while employment fell 68,000 and insurance and repair costs also climbed above the national inflation rate, compounded by renewed trade tensions affecting business investment and household budgets.
- Gasoline prices surged 27.8% in September compared to a year earlier, driven by higher crude oil prices amid Middle East uncertainty
- Passenger vehicle insurance premiums rose 5.0% and maintenance costs increased 3.7%, both exceeding the 3.1% national inflation rate
- Employment declined by 68,000 in September with unemployment reaching 6.5%, while average hourly wages grew only 2.3% annually
- Overall passenger vehicle operating costs climbed 12.9% including fuel, repairs, and insurance combined
- Trade tensions are pressuring businesses, with companies delaying investments, changing suppliers, and facing increased recruitment challenges in skilled trades
Canadian drivers have been squeezed by rising fuel, insurance and repair bills as job losses and renewed trade tensions put household budgets under pressure.
Gasoline prices jumped 27.8% in September compared with a year earlier. Passenger vehicle insurance premiums rose 5.0%, while maintenance and repair service prices increased 3.7%. All three increases exceeded the national inflation rate of 3.1%.
The figures were published Oct. 19 by Statistics Canada, the federal agency responsible for compiling national economic and population statistics.
Its consumer price index, or CPI, measures changes in the price of a basket of household purchases, including food, housing and transportation. Each category’s influence reflects its share of consumer spending. September’s annual figures compare prices with September 2025.
The sharpest increase came at the pump. Gasoline prices rose 6.1% between August and September alone. Higher crude oil prices, amid uncertainty surrounding the wars in the Middle East, helped drive the increase. The seasonal switch to cheaper winter gasoline limited the rise.
Fuel was also the main reason overall inflation accelerated from 3.0% in August. Excluding gasoline, annual inflation slowed to 2.2% from 2.4%.
Repair service prices increased more quickly than parts prices.
Passenger vehicle parts, accessories and supplies cost 1.2% more than a year earlier. Maintenance and repair service prices rose roughly three times as quickly, at 3.7%. The combined parts, maintenance and repairs category increased 2.2%.
There was little movement during September itself. Both the parts and repair service indexes were unchanged from August, while insurance premiums edged up approximately 0.1%.
The repair category includes maintenance and other work beyond collision repair. The figures measure consumer prices, with changes in shop wages, wholesale costs and insurer reimbursement rates requiring separate measures.
Replacing a vehicle also became more expensive. Passenger vehicle purchase prices increased 2.1% over the year, while rental prices rose 10.0%. Across the broader passenger vehicle operating category, including fuel, repairs and insurance, prices climbed 12.9%.
Those increases arrived alongside a weaker labour market.
Employment fell by 68,000 in September after declining by 42,000 in August. The unemployment rate reached 6.5%, up from 6.4%. Average hourly wages among employees across the economy increased 2.3% over the year, below September’s overall inflation rate.
Renewed trade friction has added pressure on business costs and investment plans.
Business leaders surveyed after Canada–U.S. trade talks broke down on Aug. 21 reported weaker export prospects and greater pressure on costs and prices. Their responses were published Oct. 19 alongside the Bank of Canada’s Business Outlook Survey, a quarterly series of interviews with senior managers at about 100 businesses.
Tariffs are taxes on imported goods. Canadian counter-tariffs can increase the cost of affected imports, while U.S. tariffs can weaken demand for Canadian exports.
Some businesses reported changing suppliers, seeking alternative markets and investing in technology to reduce costs. Others were delaying investment or reducing capacity. Respondents also reported continuing recruitment difficulties in skilled trades and specialized technical positions, despite generally subdued hiring plans.
The next interest rate decision is scheduled for Oct. 28. The Bank of Canada, the country’s central bank, uses its policy interest rate to influence borrowing costs and keep inflation near its 2% target.
The policy rate remains 2.25% following the Sept. 2 decision. Higher rates can restrain spending and inflation, but also increase financing costs for households and businesses.
Governor Tiff Macklem outlined the limits of that approach at his Sept. 2 news conference.
“Monetary policy cannot offset the effects of tariffs or influence global energy prices.”
