Inflation Holds at Three Percent
Canada Inflation Holds Steady at Three Percent as Gasoline and Grocery Pressures Ease
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Key Points
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Despite the recent moderation, grocery-store prices were still about 29% higher in August than they were in August 2021, according to Statistics Canada.
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The slowdown in grocery inflation reflected smaller annual price increases for cheese and yogurt, as well as pork, condiments, spices and vinegars, and fresh fruit.
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Analysts warned of possible upward pressure in the next inflation reading as Brent crude prices moved above US$100 a barrel and new U.S. tariffs under current President Donald Trump, along with Canada’s retaliatory measures, were set to take full effect.
Canada's inflation held steady at 3% in August, matching expectations as slower gasoline growth offset rising rent and travel costs Statistics Canada. While consumer prices fell 0.1% from July on an unadjusted basis, seasonal adjustments showed a 0.2% monthly increase. Grocery inflation slowed to 2.8% — below the headline rate for the first time since July 2024 — but gasoline prices remained 22.8% higher than a year ago RBC Economics.
Underlying inflation measures showed stability, with the Bank of Canada's median and trimmed measures holding at 2.0% and 1.9%, respectively. Yet analysts warned of upward pressure ahead as Brent crude climbed above $100 per barrel and new U.S. tariffs take effect FX Street.
Grocery Prices Finally Break Below Headline Inflation
Grocery inflation slowed dramatically in August, marking the first month since July 2024 when food costs rose slower than the overall headline rate. Dairy prices showed particularly pronounced moderation, with cheese and yogurt posting smaller annual increases Statistics Canada. Pork, condiments, spices, vinegars, and fresh fruit also contributed to the slowdown.
Despite the recent relief, grocery-store prices were still approximately 29% higher in August than they were three years earlier in August 2021 Statistics Canada. This means Canadians continue paying significantly more for everyday food items, even as the rate of increase slows.
Gasoline Inflation Eases, But Prices Stay Elevated
Gasoline prices grew at a slower pace in August, providing relief from earlier summer spikes Chek News. Yet gas remained 22.8% higher year-over-year, keeping energy costs elevated for households. This slower gasoline growth was a key factor in holding headline inflation flat at 3%.
Inflation excluding gasoline actually accelerated to 2.4% in August, showing that price pressures elsewhere in the economy were building RBC Economics. This suggests the slowdown in energy costs masked underlying momentum in other categories like services and shelter.
Travel and Rent Costs Surge, Pressuring Households
Travel-tour prices surged 26.1% year-over-year in August, while rent rose 2.8%, offsetting some of the relief from slower grocery and gasoline inflation Yahoo Finance Canada. These service and housing costs reflect strong demand and tight supply in key consumer categories.
Tariffs and Oil Prices Threaten Renewed Pressure Ahead
Analysts warned of potential upward pressure on the next inflation reading as Brent crude oil climbed above $100 per barrel FX Street. New U.S. tariffs under President Donald Trump, along with Canada's retaliatory measures, are set to take full effect soon. These trade barriers could push import costs higher across the economy.
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