Consumer inflation in Canada rose by less than expected in July, according to Statistics Canada, as falling gasoline prices offset price increases elsewhere, including for groceries.
The Consumer Price Index (CPI) in July was measured at 1.7 per cent compared to the same month in 2024, which is down from June’s reading of 1.9 per cent.
“This is a positive inflation report on many fronts as price pressures ease for goods and services,” says principal economist Andrew DiCapua at the Canadian Chamber of Commerce.
“Sticky core measures in July may put progress at risk, but if this momentum continues, we could see the Bank of Canada move rates lower in September.”
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Most economists were expecting the July inflation report to match the June result of 1.9 per cent.
The Bank of Canada has a target range for inflation of between one and three per cent, and July’s report marks the fourth straight month that inflation’s growth fell below the central bank’s mid-point target of two per cent.
Interest rates in Canada have held steady since March, with the Bank of Canada’s benchmark sitting at 2.75 per cent.
The next opportunity for the Bank of Canada to make changes to its key lending rate will come in September, but will depend on economic data, including the findings in Tuesday’s CPI report.
Tariffs and supply disruptions, including from the trade war with the United States and China, remains a threat to price stability, as noted previously by the Bank of Canada.
“Time will tell if tariffs are feeding through consumer prices, but there are some upward (price) trends on food and durable goods products that could tilt the scales as the effects of tariffs are realized,” says DiCapua.
More to come.
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Consumer inflation fell in July to 1.7%, but food costs ‘just won’t quit’
