Canada’s yearly inflation rate stayed steady at three percent in August, as per Statistics Canada’s report on Monday. The slight decline in gasoline prices and food expenses was offset by an increase in prices for tours and travel during the same period. Furthermore, shelter costs, including rents and mortgage payments, saw a marginal uptick in August.
In terms of monthly changes, consumer prices experienced a 0.1 percent decline in August. Analysts surveyed by Reuters had anticipated that annual inflation would remain at three percent, as per LSEG Data & Analytics.
The latest consumer price index data does not reflect the recent surge in crude oil prices due to escalating tensions in the Middle East. According to data from Kalibrate, the average price of regular grade gasoline nationwide has risen approximately 21 percent year-over-year as of Friday.
Economist Benjamin Reitzes from the Bank of Montreal predicted that the increase in gas prices will likely drive up inflation in September. Conversely, RBC economist Abbey Xu noted that there is limited evidence to suggest that higher energy costs are causing a widespread increase in prices across the economy.
Reitzes highlighted a surprising 0.2 percent decline in food prices in August, driven by reduced costs of fresh fruits and vegetables. However, he foresees that higher fuel expenses will exert upward pressure on food prices in the upcoming months.
Both Reitzes and Xu indicated that the latest data from Statistics Canada supports their predictions of the Bank of Canada maintaining its current stance in the near term. They emphasized that the Bank of Canada is unlikely to consider a rate hike soon, particularly with the ongoing challenges posed by escalating oil prices.
Overall, while the recent economic data presents various challenges, experts suggest that the Bank of Canada will likely maintain a cautious approach in the face of uncertainties.