Canada’s annual inflation rate was unchanged at 3.0 per cent in August as a slowdown in rising gasoline prices was offset by higher rent and travel tour costs, Statistics Canada reported Monday.
The reading, released at 8:30 a.m. Eastern time, matched the forecast of economists polled by LSEG Data and Analytics and leaves the consumer price index at the top of the Bank of Canada’s one to three per cent target range for a second consecutive month. The index rose 3.0 per cent in July, following a 2.8 per cent gain in June.
Gasoline remained the single largest force pushing the headline number higher, though its influence eased. The agency said gasoline prices were up 22.8 per cent year over year in August, down from 25.7 per cent a month earlier, as the conflict in the Middle East continued to weigh on crude markets. Excluding gasoline, consumer prices rose 2.4 per cent last month.
The clearest relief came at the grocery store. Statistics Canada said food prices rose more slowly than overall inflation for the first time since July 2024, climbing 2.8 per cent year over year. Dairy products led the deceleration, with prices for items such as cheese and yogurt rising 0.7 per cent in August compared with 3.1 per cent in July. Smaller price increases for pork, condiments, spices and vinegars also contributed to the slowdown. Clothing prices fell 1.1 per cent on an annual basis, driven by a 2.3 per cent drop in men’s clothing and a 1.9 per cent decline in children’s clothing.
Those easing prices were offset elsewhere in the basket. The agency said Canadians paid more for travel tours in August amid rising fuel surcharges and as airlines continued to adjust to the sharp decline in Canadian travel to the United States in 2025. Rent prices climbed 2.8 per cent year over year, up from 2.5 per cent in July.
Regionally, the Atlantic provinces recorded the highest rates of inflation in August, with prices accelerating in Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, Statistics Canada said. That finding arrives alongside separate industry rental figures published this month by Rentals.ca and Urbanation, which placed Nova Scotia as the most expensive province in the country to rent in for a fourth straight month even as average asking rents fell nationally.
CIBC Economics said the headline figure remained elevated in August but that underlying measures showed little sign higher energy costs were feeding into broader price pressures.
Senior economist Andrew Grantham said the Bank of Canada’s next interest rate decision is still more than a month away, with fresh inflation, employment and economic growth data due before then, and that the central bank is expected to stay on the sidelines.
“We continue to expect the bank will remain on hold at that time despite a possible energy-driven re-acceleration in headline inflation, due to the downside risks to growth emanating from U.S. trade policy and with core measures of inflation giving policymakers comfort that higher energy prices are not translating into widespread inflationary concerns,” Grantham said in a client note.
The central bank held its key policy rate at 2.25 per cent on Sept. 2, the seventh consecutive decision in which it left borrowing costs unchanged as it weighs volatile global energy prices against the drag from U.S. tariffs on the Canadian economy. Crude prices have hovered near US$100 a barrel in recent days as the war in Iran escalates.
Figures in this report were compiled from Statistics Canada data as reported by The Canadian Press.
