Canada’s inflation rate stayed steady at three percent in August, according to Statistics Canada’s latest report on Monday. The slight decrease in gasoline prices and food expenses was offset by higher costs for tours and travel. Shelter expenses, such as rents and mortgage payments, also saw a modest increase last month.
In August, consumer prices experienced a marginal 0.1 percent decline. Economists surveyed by Reuters had predicted that annual inflation would remain at three percent, as per LSEG Data & Analytics.
The data on the consumer price index released on Monday does not reflect the recent surge in crude oil prices due to escalating tensions in the Middle East. National gasoline prices have surged by approximately 21 percent year-on-year, based on pump price data from Kalibrate.
Bank of Montreal economist Benjamin Reitzes anticipates that the rise in gas prices will drive up inflation in September. He mentioned in a research note that a potential five percent increase in gasoline costs could lead to a faster rise in the Consumer Price Index.
On the other hand, RBC economist Abbey Xu pointed out that there is currently limited evidence to suggest that the spike in energy prices is significantly impacting prices across the broader economy. While there has been notable price growth in energy-intensive sectors like air travel, the overall impact on consumer spending remains contained.
Analyzing the August figures, Reitzes highlighted a 0.2 percent decline in food prices attributed to lower prices of fresh produce. However, he cautioned that the expected increase in fuel expenses might counterbalance the affordability of groceries.
Both Reitzes and Xu believe that the latest data from Statistics Canada aligns with their predictions that the Bank of Canada will maintain its current interest rates in the near term. Reitzes noted that the ongoing oil price volatility poses challenges and is likely to influence the central bank’s policy decisions.