Canada's Inflation Rate Hits Three Per Cent, No Interest Rate Hike Expected

Canada's inflation rate rose to three per cent in July, driven by higher gasoline prices and airfares.

Economists say the Bank of Canada is unlikely to raise interest rates in response, despite this latest reading.

CIBC senior economist Andrew Grantham said 'nothing to worry about', adding that policymakers have time to assess oil price fluctuations and the impact of tariffs on Canada's economy.

Grantham noted that the acceleration in July could be partly unwound next month, with Statistics Canada suggesting that there was still an impact from the World Cup on fares to the U.S. in July.

Other economists agree that the Bank of Canada is not likely to raise interest rates soon, citing a soft inflation backdrop and temporary factors driving core prices.