Canada’s annual inflation rate remained steady at three percent in August, according to a report by Statistics Canada on Monday. The slight decrease in gasoline prices and food costs was offset by an increase in prices for tours and travel. Additionally, shelter costs, including rents and mortgage payments, saw a slight uptick during the same period.
In August, consumer prices experienced a 0.1 percent decrease on a monthly basis. Economists surveyed by Reuters, as reported by LSEG Data & Analytics, had anticipated that annual inflation would hold at three percent.
The latest consumer price index data released on Monday does not reflect the recent surge in crude oil prices due to escalating tensions in the Middle East. Pump price data from Kalibrate indicates that the average price of regular grade gasoline nationwide has risen by approximately 21 percent year-over-year as of last Friday.
Economist Benjamin Reitzes from the Bank of Montreal predicts that the rise in gas prices will lead to increased inflation in September. Conversely, RBC economist Abbey Xu suggests that there is currently limited evidence showing that higher energy costs are translating into higher prices across other sectors of the economy.
Analyzing the August data, Reitzes pointed out that a 0.2 percent monthly decline in food prices, driven by lower prices for fresh fruits and vegetables, was unexpected. Nevertheless, he foresees that the increased fuel costs will likely counterbalance the affordability of groceries in the near future.
Both Reitzes and Xu believe that the latest data from Statistics Canada supports their view that the Bank of Canada will maintain its current stance in the foreseeable future. Reitzes emphasized that the data does not provide any impetus for the Bank of Canada to consider a rate hike, dampening speculation about a potential move in October. However, he highlighted concerns about the persistent rise in oil prices, which were up nearly five percent on the same day.