Inflation Rebound Fails to Move Bank of Canada

The recent rebound in inflation is not enough to sway the Bank of Canada into raising interest rates. According to Randall Bartlett, deputy chief economist at Desjardins, the three per cent mark for inflation has been met, but only temporarily.

Bartlett pointed out that sustained global energy prices are contingent on resolving tensions in the Middle East and restoring oil flows through the Strait of Hormuz.

The July inflation figures show a 12 per cent hike in airfares due to higher jet fuel prices, while travel tour costs accelerated sharply. However, economists argue that these pressures will likely unwind from the data starting in August.

Grocery store inflation cooled to 3.1 per cent in July, down from 3.9 per cent in June, but Bartlett warns that higher energy prices and a weak Canadian dollar will limit any relief for food inflation in the coming months.