August inflation holds steady at 3% as crude stays firm, food prices ease

Canada’s annual inflation growth rate held at 3 per cent in August, same as last month, as crude prices continued to stay firm affecting gasoline costs and food prices cooled only moderately, data showed on Monday.

The next month’s consumer price index data could show further strengthening as benchmark Brent crude price crossed US$100 per barrel this month and U.S. President Donald Trump’s new 50-per-cent tariffs and Canada’s retaliatory measures impact costs for the full month.

Analysts polled by Reuters had forecast the annual inflation rate at 3 per cent and monthly inflation to register no change.

On a month-on-month basis, consumer prices fell 0.1 per cent, Statistics Canada said.

Gasoline prices eased slightly in August but still increased at an annual rate of 22.8 per cent. This was down from 25.7-per-cent increase noted in July.

Food prices, which have been accelerating faster than the headline inflation since July, eased slightly and registered an annual growth rate of 2.8 per cent. This was the first time in 14 months that food prices fell below the 3-per-cent mark.

Prices for dairy products led the deceleration in food prices with costs rising 0.7 per cent annually in August compared with a 3.1-per-cent rise in July. Cheese and yogurt were the top contributors to the slowdown in dairy prices, StatsCan said.

Prices for tours and travel rose 26.1 per cent, another main contributor to the upside inflation after gasoline and food, due to base year effect. During the same period last year costs in this category had fallen due to a sharp decline in Canadian’s traveling to the United States.

CPI-median, the centermost component of the CPI basket, stood at 2 per cent, while CPI-trim, which excludes the most extreme price changes, was at 1.9 per cent in August, the same as reported in July. These core measures have largely hovered around 2 per cent for the last several months, easing worries that crude prices were spilling onto other costs.

Shelter costs, which include rents and mortgage interest costs, increased slightly to 1.5 per cent in August from 1.3 per cent in July.

The Bank of Canada said last month that it will not hesitate to increase rates multiple times if inflation stays higher and impacts the closely-watched core measures.

The central bank strives to keep inflation around the mid-point of its target range of 1 per cent to 3 per cent.