Canada’s yearly inflation rate remained steady at three percent in August, according to Statistics Canada’s report on Monday. Gasoline and food prices saw a slight decrease last month, while prices for tours and travel increased. The cost of shelter, including rents and mortgage payments, also saw a slight rise in August.
In August, consumer prices experienced a 0.1 percent decrease. A recent Reuters poll of economists had predicted that annual inflation would remain at three percent. The data on Monday’s consumer price index does not account for the recent surge in crude oil prices due to escalating tensions in the Middle East. Gasoline prices have surged by about 21 percent year-over-year nationwide, according to data from Kalibrate.
Benjamin Reitzes, an economist at the Bank of Montreal, anticipates that higher gas prices will lead to increased inflation in September. On the other hand, RBC economist Abbey Xu believes that there is limited evidence showing that higher energy costs are causing prices to rise across all sectors of the economy.
Reitzes noted that the 0.2 percent decline in food prices in August, driven by cheaper fresh produce, was unexpected. He expects that the rise in fuel costs will offset any savings on groceries in the near future. Both Reitzes and Xu agree that the recent data from Statistics Canada supports their prediction that the Bank of Canada will maintain its current monetary policy stance.
Reitzes also mentioned that the current data does not suggest any imminent interest rate hikes by the Bank of Canada, which should dampen speculation about a potential increase in October. However, he expressed concerns about the continuous rise in oil prices, which pose a significant challenge.
