Canada’s annual inflation rate remained unchanged at three per cent in August, as easing gasoline and food prices were offset by higher costs for shelter and travel, according to Statistics Canada.
Consumer prices declined 0.1 per cent on a monthly basis in August. The annual inflation reading was in line with economists’ expectations. Rent and mortgage-related expenses moved higher during the month, while Canadians also faced increased prices for tours and travel.
The latest inflation figures do not capture the recent surge in crude oil prices linked to the escalating conflict in the Middle East. Gasoline prices have already climbed sharply, with data from Kalibrate showing the national average price for regular gasoline was about 21 per cent higher year-over-year as of Friday.
Bank of Montreal economist Benjamin Reitzes warned that rising gasoline prices could push headline inflation higher in September. He said gasoline is currently on track to increase by at least five per cent during the month, which could result in an acceleration in the overall consumer price index.
RBC economist Abbey Xu said there is currently limited evidence that higher energy costs are spreading broadly across consumer prices. While inflation remains elevated in energy-intensive areas such as air travel, she said the impact has not yet significantly extended across the wider basket of goods and services. However, the risk of broader price increases could grow if oil prices remain elevated.
Food prices provided some relief in August, falling 0.2 per cent from the previous month as fresh fruit and vegetable prices declined. Reitzes cautioned that the improvement may not last, with rising energy and diesel costs potentially increasing transportation and production expenses and putting renewed upward pressure on grocery prices in the coming months.
The August inflation report also strengthened expectations that the Bank of Canada will keep interest rates unchanged in the near term. Economists said the figures provide little reason for policymakers to move toward another rate increase, although persistently high oil and gasoline prices could complicate the inflation outlook in the months ahead.
