Statistics Canada Sees 3.0% CPI Increase in July

The Consumer Price Index (CPI) rose 3.0% year over year in July, following a 2.8% gain in June, reported Statistics Canada on Monday.

On a year-over-year basis, higher prices for gasoline and travel tours in July contributed to the acceleration in the headline CPI. Moderating the faster price growth was a deceleration in the food purchased from stores index. The all-items CPI excluding gasoline rose 2.2% for the third consecutive month, said the federal agency.

The CPI rose 0.5% month over month in July. On a seasonally adjusted monthly basis, the CPI rose 0.3%, it said.

“On a yearly basis, prices for gasoline grew at a faster rate in July (+25.7%) compared with June (+20.5%). The conflict in the Middle East, including the blockade of the Strait of Hormuz and the partial closure of Red Sea shipping routes in late July, put upward pressure on gasoline prices,” said Statistics Canada.

“Year over year, prices for travel tours rose at a faster pace in July (+15.2%) compared with June (+6.8%). Contributing to higher prices were more expensive hotels and flights to US destination cities, coinciding with the hosting of World Cup matches.

“Similarly, prices for air transportation rose 12.0% year over year in July following a 9.6% increase in June. Contributing to the price increase were higher jet fuel costs.”

Statistics Canada said prices for food purchased from stores grew at a slower pace in July (+3.1%) compared with June (+3.9%) on a year-over-year basis. Despite the slowdown, July was the 18th consecutive month that grocery price inflation outpaced the all-items CPI.

“The year-over-year deceleration in grocery prices was driven by slower price growth for fresh vegetables (+3.9%) and fresh or frozen chicken (+0.3%) as well as lower prices for cereal products (-1.7%). Moderating the slowdown was higher prices for fresh fruit in July (+6.1%) compared with June (+1.7%),” it said.

“On a monthly basis, price growth for fresh fruit recorded the highest month-over-month movement for the month of July since 2011, at 4.7%. Driving the monthly increase were higher prices for berries and melons.”

Andrew Grantham, Senior Economist, CIBC Capital Markets, said Canadian inflation reaccelerated in July, albeit largely due to gasoline prices.

“The generally subdued readings for core inflation on a year-over-year basis mean that there’s no rush for the Bank of Canada to raise interest rates, and policymakers have plenty of time to assess oil price fluctuations, how the tariff situation plays out and whether the rebound in economic activity we are currently witnessing can be sustained. We continue to forecast no change in the overnight rate until around mid-2027,” he said.

Leslie Preston, Managing Director & Senior Economist, TD Economics, said inflation ticked up slightly in July due to due to higher prices at the pump and higher travel-related costs due to the World Cup. Core inflation remained bang on the Bank of Canada’s 2% target.

“We expect the Bank of Canada’s (BoC) core inflation measures to drift a little bit above 2% in the coming months on some pass through of higher energy costs to other prices in the economy,” she said.

“Short-term Government of Canada bond yields are up slightly on the higher inflation read, but given the travel impact on inflation should fade in the coming months, we aren’t too concerned that core inflation running slightly above 2% should spook the BoC into raising interest rates. The BoC has noted that Canada continues to deal with the confidence shock of on-again-off-again tariff threats from the U.S., which given there is no deal as yet to avert the 50% tariffs set to come into effect on August 19th, remains a clear downside risk to Canada’s economy.”