Canada Inflation Rate Surges to 3% in July

Canada's inflation rate rose to 3% in July, exceeding market expectations of a 2.9% annual increase.

The acceleration was driven by higher gasoline prices, which surged 25.7% year-over-year in July, compared to a 20.5% rise the previous month.

Travel tour costs also contributed to the inflationary pressure, as consumers paid more for hotels and flights, particularly to cities hosting the football World Cup.

However, a slower rise in grocery prices helped moderate the overall index, with food purchased from stores increasing 3.1% in July after a 3.9% jump in June.

The Bank of Canada is likely to keep its key policy rate unchanged for the rest of the year, given that core inflation measures, such as CPI-trim and CPI-median, remained steady at 1.9% and 2%, respectively.