Canada’s yearly inflation rate stayed steady at three percent in August, according to Statistics Canada’s latest report. The data revealed a slight decrease in gasoline and food prices for the month, while expenses for tours and travel saw an increase. Additionally, shelter costs, including rents and mortgage payments, observed a slight uptick in August.
In terms of monthly changes, consumer prices experienced a 0.1 percent decline in August. Economists surveyed by Reuters predicted that the annual inflation rate would remain at three percent, aligning with LSEG Data & Analytics’ findings.
The current consumer price index data reflects the period before the recent surge in crude oil prices due to escalating tensions in the Middle East. Gasoline prices have surged by approximately 21 percent on a year-over-year basis, as per data from Kalibrate.
Economist Benjamin Reitzes from the Bank of Montreal anticipates that rising gas prices will contribute to heightened inflation in September. On the other hand, RBC economist Abbey Xu suggests that the impact of increased energy costs on broader price levels across the economy is still limited at this point.
Reitzes highlighted a surprising 0.2 percent monthly decrease in food prices in August, attributed to lower costs of fresh fruits and vegetables. However, he foresees that the increased fuel expenses will likely lead to higher grocery prices in the upcoming months.
Both Reitzes and Xu believe that the recent inflation data from Statistics Canada reinforces their predictions of the Bank of Canada maintaining its current stance in the near term. They emphasized that the current economic indicators do not suggest an imminent interest rate hike, with the ongoing rise in oil prices posing a significant challenge.