Canada’s yearly inflation rate remained steady at three percent in August, according to a report from Statistics Canada released on Monday. This stability comes as gasoline prices and food expenses saw a slight decrease last month, while costs associated with tours and travel experienced an uptick.
The agency noted that shelter expenses, including rents and mortgage payments, also increased in August.
On a month-to-month basis, consumer prices decreased by 0.1 percent in August. A survey conducted by Reuters among economists last month indicated that the annual inflation rate was expected to stay at three percent, as reported by LSEG Data & Analytics.
The consumer price index data shared on Monday does not reflect the recent surge in crude oil prices due to escalating conflict in the Middle East. Data from Kalibrate indicates that the nationwide average price for regular gasoline has risen by approximately 21 percent compared to the previous year as of Friday.
Benjamin Reitzes, an economist at the Bank of Montreal, anticipates that rising gas prices will contribute to increased inflation in September.
“Unfortunately, gasoline prices are on track to increase by at least five percent in September, which, if it occurs, could lead to a rise in the headline CPI,” he stated in a research note on Monday.
Conversely, RBC economist Abbey Xu mentioned that there is currently limited evidence suggesting that the rise in energy costs is affecting prices in other sectors of the economy.
“While price growth has been significant in energy-intensive categories like air travel, it has not significantly impacted the wider consumer market,” she noted in her research published on Monday. “The risk of more widespread price increases will increase if oil prices remain high for an extended period.”
Analyzing the August data, Reitzes pointed out that a surprising 0.2 percent monthly drop in food prices, influenced by lower costs for fresh fruits and vegetables, was unexpected. However, he believes that elevated fuel prices will hinder further reductions in grocery costs.
<p"With the spike in energy prices, particularly diesel, food prices are likely to face upward pressure in the upcoming months,” he remarked.
Both economists, Reitzes and Xu, indicated that the statistics released on Monday support their predictions that the Bank of Canada will maintain its current stance in the near term.
“There is nothing in this data that would prompt the BoC to consider a rate increase, which should help alleviate market speculation about a possible move in October,” Reitzes wrote. “However, the rising oil prices are a significant concern, having increased nearly five percent today.”