Canadian Inflation Hits 3%, Gasoline Prices Fuel Rise

Canada's annual inflation rate accelerated to 3% in July, exceeding market expectations. The increase was largely driven by higher gasoline prices, which rose 25.7% year-over-year. Travel tour costs also contributed to the rise in consumer prices.

The Bank of Canada's control range for inflation is between 1% and 3%, and the current rate now sits at the ceiling of this range. Core inflation measures, including CPI-trim and CPI-median, came in at 1.9% and 2%, respectively. These figures are largely in line with expectations.

Economists believe that core inflation will continue to hover around 2%, which may lead the Bank of Canada to keep its key policy rate on hold for the rest of the year.