Canada experienced a rise in inflation to three percent in July, driven by increased gas prices due to escalated tensions in the Middle East. Statistics Canada reported a 25.7 percent yearly growth in gas prices in July, higher than the 20.5 percent increase seen in June. The data agency attributed the pressure on energy prices to disruptions in the shipping routes in the Red Sea and the blockade in the Strait of Hormuz.
Excluding gas, the consumer price index increased by 2.2 percent in July for the third consecutive month. The inflation rate of three percent slightly exceeded economists’ expectations, who had predicted a rise to 2.9 percent. Travel tour costs surged in July, particularly due to higher prices for hotels and flights to the U.S. during the FIFA World Cup.
Moreover, rising jet fuel costs pushed air transportation prices up by 12 percent year-over-year in July, compared to 9.6 percent in June. On the other hand, food prices helped alleviate cost pressures, with inflation for store-bought food dropping to 3.1 percent in July from 3.9 percent in the previous month. The slowdown in fresh vegetables, chicken, and cereal prices contributed to the decline. However, fresh fruit prices accelerated to 6.1 percent, primarily driven by increased costs for berries and melons.
Despite the positive food price trends, Statistics Canada highlighted that grocery price inflation has surpassed the overall consumer price index for all items for 18 consecutive months.