Canada’s annual inflation rate remained steady at three percent in August, according to Statistics Canada. The report highlighted a slight decrease in gasoline and food prices, while costs for tours and travel saw an increase. Shelter expenses, including rents and mortgage payments, also saw a slight rise during the same period.
In August, consumer prices experienced a 0.1 percent decrease on a monthly basis. A survey conducted by Reuters among economists had predicted a three percent annual inflation rate, which was in line with the actual figure reported by LSEG Data & Analytics.
The data released on Monday does not reflect the recent surge in crude oil prices due to escalating tensions in the Middle East. Gasoline prices have gone up by approximately 21 percent year-over-year, as per data from Kalibrate. Economist Benjamin Reitzes from the Bank of Montreal anticipates that the rising gas prices will contribute to increased inflation in September.
On the other hand, RBC economist Abbey Xu noted that there is limited evidence so far suggesting that higher energy costs are causing a broad increase in prices across the economy. Xu stated that while energy-intensive categories like air travel have seen high price growth, this trend has not significantly impacted overall consumer expenses. However, she warned that prolonged high oil prices could lead to greater cost pass-through.
Analyzing the August data, Reitzes pointed out a 0.2 percent monthly decline in food prices, driven by cheaper fresh fruits and vegetables. He cautioned that the expected rise in fuel costs might offset the current affordability of groceries in the near future.
Both Reitzes and Xu believe that the recent data from Statistics Canada supports their prediction that the Bank of Canada will maintain its current stance on interest rates. Reitzes emphasized that the latest figures do not suggest any imminent rate hikes from the Bank of Canada, especially with the ongoing challenges posed by increasing oil prices.
