Canadian Dollar Under Pressure as Inflation Data Falls Short
The Canadian dollar has been under pressure after mixed inflation data was released by Statistics Canada. The Consumer Price Index (CPI) fell 0.1% month-over-month in August, missing expectations for a flat reading and reversing July's 0.5% increase.
Annual inflation held steady at 3.0%, matching market forecasts. The Bank of Canada's core CPI increased 0.1% month-over-month, down from 0.2% in the previous month, while the annual rate edged up to 2.4% from 2.3%. The mixed report does little to alter the near-term policy outlook after the BoC kept its interest rate unchanged at 2.25% for a seventh consecutive meeting earlier this month.
The Bank of Canada stated that CPI inflation has been hovering around 3% in recent months, mainly due to persistently higher gasoline prices. However, it warned that high oil prices and elevated refinery margins pose a risk of spillover to other components of inflation.