Canada’s inflation rate stayed steady at three percent in August, as per the latest data from Statistics Canada. The slight decrease in gasoline and food prices was offset by an increase in prices for tours and travel. Additionally, shelter costs such as rents and mortgage payments saw a slight rise during the same period.
In August, consumer prices experienced a 0.1 percent decrease on a monthly basis. Economists surveyed by Reuters had predicted that the annual inflation rate would remain at three percent, in line with the actual figure reported by LSEG Data & Analytics.
The inflation data released on Monday does not account for the recent surge in crude oil prices due to escalating tensions in the Middle East. Average gasoline prices nationwide have surged by approximately 21 percent year-over-year, as reported by Kalibrate.
Bank of Montreal economist Benjamin Reitzes anticipates that the spike in gas prices will contribute to higher inflation in September. Conversely, RBC economist Abbey Xu suggests that the impact of increased energy costs on overall prices across the economy has been limited thus far.
While energy-intensive categories like air travel have shown notable price growth, the overall consumer basket has not been significantly affected, according to Xu. However, the risk of price increases in other sectors will rise if oil prices remain elevated.
Analyzing the August data, Reitzes highlighted a 0.2 percent decrease in food prices, mainly driven by lower prices of fresh fruits and vegetables. He foresees that the rising fuel costs will exert upward pressure on grocery prices in the upcoming months.
Both Reitzes and Xu believe that the latest data from Statistics Canada reinforces their expectations that the Bank of Canada will maintain its current interest rates in the near future. Reitzes noted that the data does not provide a basis for the Bank of Canada to consider a rate hike, especially with the persistent increase in oil prices.