Key facts
- Canada's annual inflation rate reached 3% in July, up from the previous month.
- The monthly consumer price index increased by 0.5% in July.
- Gasoline prices saw a significant year-over-year increase of 25.7% in July.
- Core inflation measures CPI-trim and CPI-median held steady at 1.9% and 2%.
Canada's annual inflation rate accelerated to 3% in July, surpassing economists' expectations of 2.9%, according to data released by Statistics Canada. The monthly consumer price index rose by 0.5%, primarily driven by a rebound in gasoline prices, which increased by 25.7% year-over-year. This marks the first time the inflation rate has reached the upper limit of the Bank of Canada's 1% to 3% control range.
While headline inflation increased, core inflation measures, CPI-trim and CPI-median, remained stable at 1.9% and 2% respectively, mirroring their prior month's readings. Economists suggest that with core inflation hovering near the midpoint of the central bank's target range, the Bank of Canada is likely to maintain its key policy rate unchanged for the remainder of the year.
Other factors contributing to the rise in the consumer price index included higher prices for travel tours, particularly hotels and flights to the United States. However, the impact of these increases was partially offset by a slower rise in grocery prices, which increased by 3.1% in July, down from 3.9% in June. Shelter costs, encompassing rents and mortgage interest, continued to show subdued growth, rising by 1.3%.
Following the data release, the Canadian dollar saw a slight increase, trading up 0.17% against the U.S. dollar at C$1.3851.