Canada's Inflation Rate Holds Steady at Three Per Cent

Canada's inflation rate held steady at three per cent in August, according to Statistics Canada. This was in line with economists' forecasts and may ease speculation of a Bank of Canada interest rate hike next month.

BMO's managing director Benjamin Reitzes said there was little in the inflation report to push the central bank toward an interest rate increase. However, he noted that oil prices continued to be a problem, which could drive angst among policymakers and concern about spillover into broader inflation.

Excluding gasoline, consumer prices rose 2.4 per cent last month. Canadians paid more for travel amid rising fuel surcharges and as airlines adjusted to the sharp decline in Canadian travel to the United States in 2025. Rent prices also trended higher, increasing 2.8 per cent year-over-year in August.

Financial odds of a hike at the central bank's Oct. 28 meeting have jumped over the past week or so to 60 per cent, according to LSEG Data & Analytics. Royal Bank of Canada economist Abbey Xu said that while food prices rose more slowly than overall inflation for the first time since July 2024, consumers might still feel it's expensive to fill up their gas tanks and go to the grocery store.