Canada CPI Surpasses Expectations, But BoC Remains Cautious
The Canadian Consumer Price Index (CPI) for July rose to 3.0% year-over-year from 2.8%, slightly stronger than expected, according to Continuum Economics.
The Bank of Canada's core rates showed a balance that is still close to target for CPI-Median and CPI-Trim, with the underlying inflation rate appearing to be about where the BoC wants it.
The data suggests that the revival of GDP growth in Q2 after negative quarters in Q4 2025 and Q1 2026 may have eased deflationary pressure, but continued seasonally adjusted ex food and energy gains of 0.3% would be too high for the BoC's comfort.
The strongest component was transportation, up 0.8%, lifted by strength in travel tours and air fares as well as gasoline, while traveler accommodation was a negative factor that helped restrain shelter to a 0.1% seasonally adjusted gain.