Canada's Inflation Rate Hits 3% in July Amid Gas Price Rebound

Canada's inflation rate rose to 3% in July due to a rebound in gas prices, according to Statistics Canada. The consumer price index, excluding gas, increased by 2.2% for the third consecutive month.

Jet fuel prices surged, leading to a 12% hike in airfare costs last month, up from 9.6% in June. Travel tour costs also accelerated sharply due to higher hotel and flight prices to cities hosting FIFA World Cup games.

However, grocery store inflation cooled down to 3.1%, down from 3.9% the previous month, as prices for fresh vegetables, chicken products, and cereal products decreased. In contrast, inflation for fresh fruit accelerated to 6.1% due to rising prices for berries and melons.

Despite some firmness in core inflation measures last month, long-run annual rates remain near the Bank of Canada's target rate of 2%. BMO senior economist Robert Kavcic expects the central bank to maintain its benchmark interest rate at 2.25% due to stable inflation and ongoing trade uncertainty.