Canada’s annual inflation rate remained steady at three percent in August, according to Statistics Canada. This stability was influenced by a slight decrease in gasoline and food prices, while prices for tours and travel experienced a rise. Additionally, shelter costs such as rents and mortgage payments increased during the same month.
Consumer prices saw a 0.1 percent decline on a monthly basis in August. Analysts, surveyed by Reuters, had anticipated that the annual inflation rate would hold at three percent. The recent data does not reflect the impact of the recent surge in crude oil prices due to escalating conflicts in the Middle East. Notably, the average price of regular grade gasoline nationwide has surged by about 21 percent year-over-year.
Economist Benjamin Reitzes from the Bank of Montreal predicts that the rise in gas prices will contribute to increased inflation in September. On the other hand, RBC economist Abbey Xu believes that the effects of higher energy costs on overall price levels in the economy are currently limited.
Despite a surprise 0.2 percent monthly drop in food prices in August, driven by cheaper fresh produce, Reitzes expects that rising fuel costs will lead to higher grocery prices in the near future. Both Reitzes and Xu suggest that the recent data from Statistics Canada aligns with their expectations of the Bank of Canada maintaining its current monetary policy stance.
Reitzes emphasized that the latest data is unlikely to prompt the Bank of Canada to consider a rate hike, especially with the ongoing challenges posed by increasing oil prices. The economists anticipate that the central bank will remain cautious in the foreseeable future, given the prevailing economic conditions.