Canada: Inflation accelerates in July from June
Latest reading: Consumer prices rose 3.0% in annual terms in July, following a 2.8% increase in the previous month. The reading was above market expectations but just within the Central Bank’s 1.0–3.0% inflation target range. Relative to the previous month’s figures, there were higher price pressures for transportation (+7.9% on a year-on-year basis vs +6.8% in June), recreation and culture (+4.4% vs +3.8% in June) and clothing and footwear (+1.9% vs +1.0% in June). In contrast, there were reduced price pressures for housing (+1.3% vs +1.5% in June) and food (+3.1% vs +3.4% in June).
Meanwhile, core consumer prices increased 2.3% on a year-on-year basis in July, following a 2.1% rise in the previous month.
Finally, consumer prices were up 0.53% in July on a month-on-month basis, following a 0.35% fall in the prior month.
Panelist insight: On the implications of the latest data, Nomura analysts said:
“Services inflation picked up, primarily due to higher tour and travel prices, partly reflecting FIFA World Cup-related demand. Higher jet fuel costs also boosted airfares. We believe these effects are temporary and should reverse in coming months. Other details were encouraging. Shelter inflation continued to ease, while grocery price inflation also moderated. Overall, excluding noisy travel-related services, the report continues to point to contained inflation pressures and should keep the BoC comfortable with its current stance. We continue to expect the BoC to remain on hold through 2026.”