Canadian Inflation Hits 3% as Gasoline Prices Surge

Canada's annual inflation rate rose to 3% in July, exceeding expectations. According to Statistics Canada, gasoline prices drove this increase, accelerating by 25.7% in July compared to June. This rise in energy costs also pushed up the overall consumer price index (CPI) by 0.5% on a monthly basis.

The Bank of Canada's control range for inflation is between 1% and 3%. With core inflation measures at 1.9% and 2%, economists believe that the central bank will keep its key policy rate unchanged for the rest of the year. This decision would be based on core inflation being largely stable around the midpoint of the target range.

The slowdown in grocery price inflation, which rose by 3.1% in July after a 3.9% acceleration in June, also contributed to the moderation of CPI growth. Shelter costs remained subdued, increasing by only 1.3% in July.