Canada Inflation Holds Steady at 3%, but Oil Price Surge Raises Rate Risks

Canada's annual inflation rate held steady at 3% in August, matching July's pace, as elevated energy costs continued to put pressure on consumers. The reading keeps inflation above the Bank of Canada's 2% target and comes as the central bank weighs competing risks of persistent price pressures and a softer economic outlook.

The Bank of Canada held its policy rate at 2.25% earlier this month, its seventh consecutive decision without a change. With oil prices rising again, the Bank has little reason to declare victory over price pressures.

Ryan Kirkley, CEO & Co-Founder of Global Settlement Network, said that while the headline inflation rate will attract attention, the more important story is underneath it. Much of the pressure is still coming from energy, while the Bank's preferred core measures remain much closer to target.