Canada Inflation Accelerates to 3% Amid Higher Gas Prices

Canada's annual inflation rate accelerated to 3% in July, slightly above expectations, due to higher gasoline prices and travel tour costs. The consumer price index rose by 0.5% on a monthly basis, also driven by increased gasoline costs.

The acceleration in headline inflation was anticipated, with analysts expecting energy prices to impact the numbers. Core inflation measures, including CPI-trim and CPI-median, came in at 1.9% and 2%, respectively, showing stability within the central bank's control range.

Economists note that with core inflation hovering around 2%, the midpoint of the Bank of Canada's control range, it is likely to keep its key policy rate unchanged for the rest of the year. Gasoline prices were the main driver of the annual rise in the consumer price index, increasing by 25.7% in July compared to a 20.5% increase in June.

Despite some moderation in grocery prices, which rose 3.1% in July after a 3.9% increase in June, shelter costs remained subdued, rising only 1.3%. The Canadian dollar firmed slightly following the data release, trading up 0.17% against the U.S. dollar.