Canada’s annual inflation rate remained steady at three percent in August, according to Statistics Canada. The stability was influenced by a slight decrease in gasoline and food prices, while tour and travel costs saw an increase. Additionally, shelter expenses such as rents and mortgage payments rose slightly during the same period.
In August, consumer prices experienced a 0.1 percent decrease on a monthly basis. Analysts, as per a Reuters poll conducted by LSEG Data & Analytics, had anticipated that the annual inflation rate would stay at three percent.
The latest consumer price index data does not reflect the recent surge in crude oil prices due to escalating tensions in the Middle East. On average, the price of regular gasoline nationwide has risen by approximately 21 percent year-over-year, based on pump price data from Kalibrate.
Economist Benjamin Reitzes from the Bank of Montreal predicted that escalating gas prices could drive higher inflation in September. Conversely, RBC economist Abbey Xu highlighted limited evidence suggesting that increased energy costs are spurring price hikes in other sectors of the economy.
Reitzes noted a 0.2 percent monthly decline in food prices in August, mainly attributed to lower prices of fresh fruits and vegetables. However, he foresees that rising fuel expenses may counterbalance this trend, leading to higher food prices in the upcoming months.
Both Reitzes and Xu emphasized that the recent data from Statistics Canada supports their belief that the Bank of Canada will keep interest rates unchanged in the near future. Reitzes pointed out that the current circumstances are unlikely to prompt the central bank to consider a rate hike, especially with the ongoing challenges posed by escalating oil prices.