Canada’s inflation rate held at 3.0% year on year in August, matching expectations and July’s reading. On a non-seasonally adjusted basis, CPI reversed from a 0.5% monthly increase to a 0.1% decline, undershooting expectations for no change. However, CPI rose 0.2% month on month after seasonal adjustment, indicating that the unadjusted decline did not represent a broad fall in consumer prices.
The unchanged headline concealed opposing forces. Gasoline inflation slowed from 25.7% to 22.8%, placing downward pressure on CPI. Yet inflation excluding gasoline accelerated from 2.2% to 2.4%. Travel-tour inflation jumped from 15.2% to 26.1%, partly because of a base-year effect and new fuel surcharges, even as prices fell 2.9% month on month. Rent inflation also accelerated from 2.5% to 2.8%, led by increases in Manitoba and Ontario.
Other components were more constructive. Grocery inflation slowed from 3.1% to 2.8%, falling below headline CPI for the first time since July 2024, while dairy inflation dropped from 3.1% to 0.7%. Clothing prices moved from a 0.9% increase to a 1.1% decline. The Bank of Canada’s core measures showed no broad reacceleration: CPI median held at 2.0%, CPI trimmed stayed at 1.9%, and CPI common eased from 2.7% to 2.6%. Overall, underlying inflation stayed contained, although firmer rent and inflation excluding gasoline made the report less benign than the unchanged headline suggested.
Data Summary
| Indicator | August | July |
|---|---|---|
| CPI y/y | 3.0% | 3.0% |
| CPI m/m | -0.1% | 0.5% |
| CPI excluding gasoline y/y | 2.4% | 2.2% |
| Gasoline y/y | 22.8% | 25.7% |
| CPI common y/y | 2.6% | 2.7% |
| CPI median y/y | 2.0% | 2.0% |
| CPI trimmed y/y | 1.9% | 1.9% |
Key Takeaways
- Headline CPI held at 3.0%, matching expectations, while the monthly rate reversed from a 0.5% increase to a 0.1% decline, below the 0.0% consensus.
- Seasonally adjusted CPI rose 0.2% month on month, showing that the unadjusted decline did not represent a broad fall in consumer prices.
- Gasoline inflation slowed from 25.7% to 22.8%, but CPI excluding gasoline accelerated from 2.2% to 2.4%.
- Travel-tour inflation surged from 15.2% to 26.1%, partly because of a base effect and fuel surcharges, despite prices falling 2.9% month on month.
- Rent inflation accelerated from 2.5% to 2.8%, led by Manitoba and Ontario.
- Grocery inflation slowed from 3.1% to 2.8%, falling below headline CPI for the first time since July 2024. Dairy inflation dropped from 3.1% to 0.7%.
- Core inflation did not broadly reaccelerate: CPI median held at 2.0%, CPI trimmed stayed at 1.9%, and CPI common eased from 2.7% to 2.6%.
- The report was contained at the core but mixed underneath, as slower gasoline and grocery inflation offset firmer rent and inflation excluding gasoline.
