Canada saw a steady annual inflation rate of three percent in August, according to Statistics Canada’s report on Monday. Gasoline and food prices experienced slight decreases last month, while the costs for tours and travel increased. Shelter expenses, such as rents and mortgage payments, also rose slightly in August.
In terms of monthly changes, consumer prices dropped by 0.1 percent in August. Analysts in a Reuters poll had anticipated that annual inflation would remain at three percent. Notably, the latest consumer price index data does not reflect the recent surge in crude oil prices due to escalating tensions in the Middle East. Gasoline prices across the country have surged by approximately 21 percent year-over-year as of the latest data.
Economist Benjamin Reitzes from the Bank of Montreal predicts that the rising gas prices will likely drive up overall inflation in September. On the other hand, RBC economist Abbey Xu believes that the impact of higher energy costs on broader price levels in the economy is currently limited.
Reitzes noted a 0.2 percent monthly decline in food prices in August, mainly attributed to cheaper fresh produce. However, he foresees that the increasing fuel expenses will counterbalance the affordability of groceries in the upcoming months.
Both Reitzes and Xu agree that the latest data from Statistics Canada supports their view that the Bank of Canada will maintain its current interest rates in the near term. Reitzes emphasized that the current inflation data does not signal a probable rate hike by the Bank of Canada, citing the ongoing challenges posed by escalating oil prices.