Canada’s inflation rate reached three percent in July, driven by escalating tensions in the Middle East leading to a surge in gas prices. Statistics Canada reported a 25.7 percent year-over-year increase in gas prices in July, up from 20.5 percent in June. The blockade in the Strait of Hormuz and disruptions in Red Sea shipping routes were cited as reasons for the upward pressure on energy costs.
Excluding gas, the consumer price index rose by 2.2 percent in July for the third consecutive month. This inflation rate slightly exceeded economists’ expectations, who had predicted a rise to 2.9 percent.
In July, costs for travel tours spiked, with higher prices for hotels and flights to U.S. destinations due to the FIFA World Cup. Additionally, increased jet fuel costs contributed to a 12 percent year-over-year rise in air transportation prices, up from 9.6 percent in June.
On the other hand, food prices helped alleviate cost pressures, as inflation for food purchased from stores decreased to 3.1 percent in July, down from 3.9 percent in the previous month. The slowdown in growth for fresh vegetables, chicken, and cereal products contributed to the overall decrease in food prices. However, the cost of fresh fruit, particularly berries and melons, rose significantly by 6.1 percent.
Although food prices showed a positive trend in July, Statistics Canada highlighted that grocery price inflation has surpassed the all-items consumer price index for 18 consecutive months.