Canada's Inflation Rate Expected to Hold at 3.0% in August

RBC Economics is forecasting that Canada's inflation rate will hold steady at 3.0% in August, according to a recent note from the Canadian bank's research team.

The Bank of Canada is closely monitoring whether high energy costs are starting to show up in broader prices, with gasoline prices still up 23% from last year and dipping slightly from July. Food inflation has cooled lately, but RBC expects it will run near 3% in August as well.

The more important measure for policymakers is core inflation, which strips out some of the most volatile prices to better capture the underlying trend. RBC expects this measure around 1.9% year-on-year and notes that price pressures look fairly contained across categories, in line with the central bank's 2% target.