Canada's Inflation Steady at 3%, Crude Prices Threaten Upside

Canada's inflation held steady at 3% in August, influenced by firm crude prices affecting gasoline costs. While food prices eased slightly, the upcoming data may show further strength as Brent crude prices and new U.S.-Canada tariffs take effect. Analysts expected no changes in monthly inflation.

Canada's annual inflation rate remained steady at 3% in August, according to data released on Monday, as crude oil prices maintained their strength, impacting gasoline costs. Although food prices showed a moderate cooling, they were not significant enough to influence the overall inflation rate.

Next month's consumer price index data may indicate further strengthening. This comes as Brent crude prices have surpassed $100 per barrel and new U.S. tariffs from President Donald Trump, coupled with Canada's retaliatory measures, take full effect. Analysts surveyed by Reuters had anticipated the inflation rate to hold at 3%, with no changes in monthly inflation.

Consumer prices fell slightly by 0.1% month-on-month, according to Statistics Canada. Gasoline prices, while easing a bit in August, still reflected an annual increase of 22.8%, down from the previous month's 25.7%. Food prices, which have been rising faster than headline inflation since July, saw a slight decrease, with an annual growth rate of 2.8%—marking the first time in 14 months they fell below 3%. Costs for dairy products notably eased, with cheese and yogurt being the primary contributors to this slowdown.