Canada’s headline CPI eased to 1.7% yoy in July, down from 1.9% yoy and below expectations for no change. The decline was driven by a sharp -16.1% yoy drop in gasoline prices, deepening from June’s -13.4% yoy. Excluding gasoline, CPI held steady at 2.5% yoy, in line with the prior two months. On a monthly basis, CPI rose 0.3% mom, matching forecasts.
Core measures delivered a mixed picture. CPI median ticked up to 3.1% yoy, as expected, while CPI trimmed held at 3.0% yoy. CPI common stayed at 2.6% yoy, a touch softer than anticipated rise to 2.7% yoy. Together, the readings show inflation has not accelerated, though underlying pressures remain sticky.
The figures reinforce the view that while headline inflation is cooling, the BoC cannot declare victory yet. Policymakers must weigh the relief from falling energy costs against stubborn core pressures. That balance will be crucial in shaping whether the Bank resumes easing at the September meeting or holds back to assess further data.
