August Inflation Holds Steady at Three Percent
The latest inflation figures from Statistics Canada show that Canada's annual inflation rate held steady at three percent in August, aligning with economists' forecasts. This stability could ease speculation of a Bank of Canada interest rate hike next month, according to Benjamin Reitzes, BMO's managing director of Canadian rates and macro strategist.
Reitzes noted that there was little in the inflation report to push the central bank toward an interest rate increase, potentially cooling market expectations of an October hike. However, oil prices continued to be a concern, which could drive angst among policymakers and worry about spillover into broader inflation.
The conflict in the Middle East drove up gasoline prices in August by 22.8 percent compared to 25.7 a month earlier. Excluding gasoline, consumer prices rose 2.4 percent last month. The slowdown in rising gas prices was offset by higher costs for rent, travel tours, and air travel.
Canadians paid more for travel amid rising fuel surcharges and as airlines adjusted to the sharp decline in Canadian travel to the United States in 2025. Rent prices also trended higher, increasing 2.8 percent year-over-year in August, up from 2.5 percent in July.