Canada's Annual Inflation Rate Hits 3% in July

Canada's annual inflation rate accelerated to 3% in July, slightly more than expected. The country's consumer price index rose by 0.5% on a monthly basis, driven primarily by an increase in gasoline costs.

The Bank of Canada's control range is between 1% and 3%, and the current inflation rate sits at the upper limit of this range. Economists have said that with core inflation largely hovering around 2%, the midpoint of the central bank's control range, the BoC is likely to keep its key policy rate on hold for the rest of the year.

Gasoline prices were a major driver of the annual rise in CPI, increasing by 25.7% in July against an increase of 20.5% in June. Additionally, prices for travel tours contributed to the yearly rise, as consumers paid more for hotels and flights to the United States, particularly to cities hosting the football World Cup.

However, a slower rise in grocery prices moderated the CPI, with food purchased from stores rising by 3.1% in July after posting a 3.9% acceleration in June. Shelter costs continued to be subdued, with a rise of only 1.3% in July.