Stable Inflation Rate Masks Ongoing Concerns Over Energy Prices

Canada's inflation rate remained steady at 3% in August, according to Statistics Canada. This is despite high oil prices continuing to drive up gasoline costs, which rose by 22.8% year-over-year.

The slowdown in rising gas prices was offset by higher costs for rent and travel tours, which contributed to the unchanged inflation rate. Excluding gasoline, consumer prices rose by 2.4% last month.

Benjamin Reitzes, BMO's managing director of Canadian rates and macro strategist, said there is little in the inflation report to push the central bank toward an interest rate increase. However, he noted that oil prices could still pose a problem for policymakers.

Royal Bank of Canada economist Abbey Xu said that while food affordability remains a challenge for households, recent data shows food inflation ticking slightly lower for several months. She added that improvements in food prices do not make the household cost of living pressure any less significant.