Consumer inflation held steady at three per cent last month compared to a year earlier as higher rent and travel costs offset a slowdown in rising prices for gas and groceries.
Statistics Canada says the annual rate of inflation, as measured by the consumer price index (CPI), was unchanged from July.
The agency says gasoline costs continued to increase in August but at a slower pace, with prices up 22.8 per cent compared with 25.7 per cent a month earlier, as the conflict in the Middle East continued to weigh on prices.
Excluding gasoline, consumer prices rose 2.4 per cent last month compared to a year earlier, up from 2.2 per cent in July.
Some economists note the recent oil and gas price spikes appear to be contained, at least for now.
“Headline inflation remained elevated in August, but core measures continued to show only limited evidence that high energy prices are spilling over into wider inflationary pressure,” said CIBC economist Andrew Grantham in a statement.
“With the economic outlook clouded by U.S. tariffs and related uncertainty we think that the Bank [of Canada] should, and will, keep interest rates on hold at the October meeting, particularly with core measures of inflation not exactly flashing warning signs.”
Abbey Xu, economist at the Royal Bank of Canada, also said, “There continued to be limited evidence that elevated energy costs were generating significant second-round inflation. Price growth remained high for energy-intensive categories such as air travel but had not spread materially across the broader consumer basket.”
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Xu added: “The risk of greater pass-through will rise the longer oil prices remain elevated.”
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Travel and tour costs surged 26.1 per cent in August from a year earlier, up from a 15.2 per cent increase in July, and Statistics Canada says rising fuel surcharges amid higher prices for jet fuel was one of the main reasons for this.
One of the other reasons for this sharp increase in travel and tour costs was what the agency says was a “base-year effect” when comparing to a year earlier. That’s because prices for flights and tours were significantly higher last month than they were 12 months before, when there was a notable decline in Canadian travel to the United States.
Housing costs were another hot spot for inflation last month, with rent prices increasing 2.8 per cent year-over-year in August, up from 2.5 per cent in July.
Grocery prices continued to rise by 2.8 per cent last month compared to a year earlier, down from 3.1 per cent in July.
August also marked the first time since July 2024 that retail food costs increased at a slower pace than the overall inflation reading, and Statistics Canada says grocery price growth increased at a slower pace than all the other categories in the August CPI report.
Dairy products like cheese and yogurt saw price growth decelerate the most in the grocery basket, rising 0.7 per cent year-over-year in August compared with a 3.1 per cent increase in July.
The agency also notes that although overall food price growth cooled off in August, food prices have increased 29 per cent since August 2021.
– with files from The Canadian Press
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