Inflation Expectations Hold Steady Amid Falling Oil Prices

Economists expect Canada's annual inflation rate to have remained steady at three percent in August, driven by falling oil prices. Tu Nguyen, an economist at RSM Canada, predicts that the headline number will not exceed this threshold.

The decline in gasoline prices was due to a decrease in hostilities between Iran and the United States, with crude prices hovering around US$100 per barrel in recent days. However, despite some relief at the pumps, gas prices were still up 23 percent from a year ago.

RBC economists Nathan Janzen and Abbey Xu note that the Bank of Canada has been monitoring the impact of higher energy prices on inflationary pressures. While the central bank left its key policy rate unchanged at 2.25 percent earlier this month, it warned that significant spillover from higher energy prices into broader inflation could push policymakers to raise interest rates.