Canada Inflation Hits Three Percent Amid Ongoing US Tariff Threats

Canada's annual inflation rate hit three percent in July, driven by elevated gasoline prices and increased costs in tourism-related businesses. The Middle East conflict, including the blockade of the Strait of Hormuz and partial closure of Red Sea shipping routes, put upward pressure on gasoline prices, which rose 25.7% from July 2025.

The looming threat of new US tariffs, set to take effect August 19, has added uncertainty to Canada's economy. Prime Minister Mark Carney said talks with the US are at an 'intense and delicate' stage but declined to discuss details.

Economists do not expect an interest rate hike to cool inflation, given the risks facing Canada's economy. TD Bank senior economist Leslie Preston said Monday's inflation data would not 'spook' the Bank of Canada into raising rates.