Bank of Canada Breathe Easy: Inflation Hits 3% in July Amid Energy Price Volatility

The Bank of Canada can breathe a sigh of relief as inflation numbers for July came in at 3%, slightly above expectations, but not alarmingly high. Global energy volatility and higher gas prices were primarily to blame for the increase, with gas prices up 25.7% year-over-year.

According to Statistics Canada, global energy volatility was largely due to a ceasefire agreement between the US and Iran unraveling in July, leading to increased oil prices. This had a ripple effect on other energy-related costs, including jet fuel and airfares, which rose 12% in July compared to the previous month.

However, economists point out that these pressures are likely to unwind from the inflation data starting in August as gas prices ease. Despite this, they warn of ongoing trade risks, particularly with regards to new US tariffs set to take effect on August 19.