Canadian inflation held steady in August, with easing gasoline and grocery price growth offset by higher travel tour and rent costs.
Statistics Canada reported Monday that the Consumer Price Index rose 3% year over year in August, matching July’s increase. On a monthly basis, the CPI fell 0.1%, while the seasonally adjusted index increased 0.2%.
Gasoline prices remained a major source of inflation but rose at a slower annual pace, increasing 22.8% from a year earlier compared with 25.7% in July. Excluding gasoline, inflation accelerated to 2.4% from 2.2%.
Travel tour prices were one of the biggest upward contributors, jumping 26.1% year over year after rising 15.2% in July. Statistics Canada attributed part of that increase to a base-year effect, as well as higher jet fuel costs and fuel surcharges.
Grocery inflation continued to cool. Food purchased from stores rose 2.8% from a year earlier, down from 3.1% in July and below the headline inflation rate for the first time since July 2024.
Dairy products were a major contributor to the slowdown, with prices rising just 0.7% year over year compared with 3.1% in July. Smaller increases for pork, condiments and fresh fruit also helped moderate food inflation. Even so, grocery prices remain 29% higher than in August 2021.
Clothing prices also eased, falling 1.1% year over year, led by lower prices for men’s and children’s clothing.
RBC Economics said in a report today that underlying inflation pressures remained relatively contained despite elevated energy costs. CPI excluding food and energy rose 2.1% year over year, while the Bank of Canada’s preferred trim and median measures remained close to the 2% target.
RBC also noted there is still limited evidence that high energy costs are spilling broadly into other consumer prices.
The bank said the report supports its forecast for the Bank of Canada to hold interest rates through the remainder of 2026 before gradually raising rates in 2027, although persistent energy inflation could increase the risk of an earlier hike.
