Canada’s July inflation rate fell to its lowest since March 2021, likely paving the way for another Bank of Canada interest rate cut in September.
Statistics Canada’s consumer price index pegged the overall July inflation rate at 2.5%, down from a 2.7% gain in June and in line with market expectations. The May inflation rate came in at 2.9%.
Deceleration in headline inflation was “broad-based” in July, StatsCan said, stemming from lower prices for travel tours, passenger vehicles and electricity. Inflation has remained below 3% since January and continues to close in on the Bank of Canada’s preferred target of 2%.
Shelter costs remain the main factor putting upward pressure on inflation, rising 5.7% on a year-over-year basis in July. However, that is still down from the 6.2% gain in June.