Canada's August inflation rate remains stable at 3%, CPI down 0.1% month-on-month

In August, Canada’s inflation rate remained at 3%, in line with expectations, as the year-on-year increase in gasoline prices slowed. Despite ongoing Middle East conflicts continuing to put upward pressure on energy costs, Statistics Canada reported on Monday that retail gasoline prices in August rose 22.8% compared to the same period last year, following a 25.7% increase in July. However, the slowing year-on-year growth in gasoline prices was offset by rises in travel and rent costs. On a monthly basis, the consumer price index fell by 0.1%, matching the median forecast from economists’ surveys. The data shows that, despite the Bank of Canada’s growing concerns about inflationary risks from the Iran war, underlying price pressures in August remained within manageable limits. Bank of Canada Governor Macklem warned earlier this month that the longer the Middle East conflict drags on, the more likely rising energy prices will spill over into broader areas of the economy. He stated that although a new round of trade tensions with the US exacerbates inflation risks, persistently high energy prices are the bigger concern.