Gas Prices Spark Inflation Concerns as Economists Predict July Rise

Economists predict that inflation will rise in July due to higher gas prices. According to a Reuters poll, annual inflation is expected to increase to 2.9% from 2.8% in June. The rebound in global oil prices after the tentative ceasefire between the US and Iran broke down contributed to the higher gas prices.

A report by Royal Bank of Canada found that gas prices were 25% higher in July than a year ago, compared to a 20% annual hike in June. TD Bank senior economist Andrew Hencic said that the volatility in energy prices has been 'quite steep', leading to a significant contribution from gasoline and energy prices in the inflation report.

Food inflation is also expected to remain above 3%, despite easing slightly in July. However, Hencic warned that sustained pressure on food inflation could occur in the coming months due to weather-related disruptions and supply chain issues.