Canada Inflation Hits 3% in July on Gas Rebound
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- Statistics Canada reported Canada's annual inflation rate rose to 3% in July, up from 2.8% in June, driven by a rebound in gasoline prices after renewed Middle East hostilities pushed global oil higher.
- Most economists had expected inflation to rise just to 2.9%, making the actual 3% reading slightly hotter than consensus forecasts.
- Excluding gasoline, the CPI rose 2.2% for a third consecutive month, indicating underlying domestic price pressures remained stable.
- Airfares surged 12% year-over-year in July, up from 9.6% in June, as higher jet fuel costs bit — and Statscan attributed accelerating travel tour costs partly to pricier hotels and flights to US cities hosting FIFA World Cup games.
- Grocery inflation cooled to 3.1% from 3.9%, helped by slower fresh vegetable and chicken price hikes and lower cereal prices, though fresh fruit inflation spiked to 6.1% from 1.7%.
- Grocery store inflation has now outpaced the all-items CPI for 18 consecutive months.
- The July release is the Bank of Canada's final inflation read before its September 2 interest rate decision.
Why it matters: The Bank of Canada heads into its September 2 rate decision with headline inflation back at 3% — hotter than the 2.9% economists expected — but the underlying ex-gas CPI held steady at 2.2% for a third straight month, suggesting the rebound is energy-driven rather than a broad reacceleration of domestic price pressures.
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