Canada maintained a stable annual inflation rate of three percent in August, according to Statistics Canada’s recent report. Gasoline and food prices saw a slight decline last month, while prices for tours and travel increased. The housing costs, including rents and mortgage payments, also saw a modest increase in August.
In terms of monthly changes, consumer prices experienced a 0.1 percent decrease in August. Analysts, as per a Reuters poll, had anticipated the annual inflation to hold steady at three percent. The latest consumer price index data does not reflect the recent surge in crude oil prices due to escalating tensions in the Middle East. National pump price data indicates a 21 percent year-over-year increase in regular grade gasoline prices.
Economist Benjamin Reitzes from the Bank of Montreal predicts that higher gas prices will likely lead to increased inflation in September. On the other hand, RBC economist Abbey Xu notes that there is limited evidence of rising energy costs impacting prices across the broader economy.
Despite a monthly 0.2 percent decrease in food prices driven by cheaper fresh produce, Reitzes foresees that the rise in fuel costs will eventually push up grocery prices. Both Reitzes and Xu believe that the latest data from Statistics Canada supports their view that the Bank of Canada will maintain its current stance in the near term.
The analysts do not see any immediate pressure for a rate hike from the Bank of Canada, with Reitzes pointing out that the current situation with oil prices remains a concern. He mentioned that the recent spike in oil prices could influence market speculation regarding a potential rate increase in October.