Canada’s surprise softening inflation data shows Canadians could be in for an extended period of flat interest rates, at least one economist suggests.

On Tuesday, Statistics Canada revealed Canada’s consumer price index for September came in at 3.8 per cent, down 0.1 per cent from August and beating economists’ expectations.

Veronica Clark, an economist with Citi, believes the latest data will compel the Bank of Canada to pause rate hikes during its decision next week, and could continue a pause for the foreseeable future.

“The August data that we had about a month ago had been much stronger,” she told BNN Bloomberg in a television interview Wednesday. “It looked very genuinely concerning. So I had been expecting that maybe the Bank of Canada would be hiking one more time but that looks a little bit less concerning after some revisions that we got yesterday.”

Still, if the downward inflation trend does not continue, Clark believes the Bank of Canada could be quick to hike rates again.

“If we're not really seeing much progress there, I do really believe the Bank of Canada when they say the risks are that they can hike again, and I think the market believes that too and even for next week, I wouldn't rule out the possibility that they are hiking,” she said.

Clark said she will be keeping an eye on housing costs for an idea about what the Bank of Canada might be thinking in the future.

“I'm certainly still watching housing-related prices,” she said. “We have had housing resale prices that have ticked up a good bit. We haven't really seen that in some of the new home price data that do go into CPI (consumer price index). So that’s still a risk.”