Canada's July Annual Inflation Accelerates To 3% As Gasoline Rebounds

• Canada's annual inflation rate accelerated to 3% in July, slightly more than expected, as renewed United States-Iran tensions drove gasoline ​prices, while the cost of travel tours also rose. On a monthly basis, the consumer price index rose by 0.5%, Statistics Canada said, once again driven by an increase in gasoline costs.
• The inflation rate now sits at the ceiling of the Bank of ​Canada's (BoC’s) 1% to 3% control range. Analysts polled by Reuters had projected consumer ​prices to rise 2.9% annually and 0.4% on a monthly basis ⁠in July
• The increase in headline inflation rate had been widely anticipated because of ​higher energy prices, leaving the trend of underlying or core inflation as a more important ​signal for the BoC. Core inflation measures CPI-trim and CPI-median came at 1.9% and 2%, respectively. Both measures were at 1.9% in the prior month, StatsCan said
• Economists have said that with core ​inflation largely hovering around 2%, the midpoint of the central bank's 1% to 3% ​control range, the BoC is likely to keep its key policy rate on hold for the rest ‌of ⁠the year. Gasoline was the major driver for the annual rise in CPI, with prices accelerating 25.7% in July against an increase of 20.5% in June, the statistics agency noted. Prices for travel tours also contributed to the yearly rise in July as consumers ​paid more for hotels ​and flights to the ⁠United States, especially to the cities that hosted the football World Cup.
• However, a slower rise in grocery prices moderated the CPI, ​with food purchased from stores rising by 3.1% in July after ​posting a ⁠9% acceleration in June. Despite the slowdown in grocery costs, July was the 18th consecutive month that grocery price inflation outpaced the all-items CPI.  Shelter costs, which include rents and ⁠mortgage interest ​costs, continued to be subdued, with the costs ​rising 1.3% in July.

(Source: Reuters)