Rise in consumer price index for July 'nothing to worry about'
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Canada’s inflation rate in July rose to three per cent from 2.8 per cent the month before as gasoline prices spiked, but economists say the Bank of Canada is likely to look past this latest reading.
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Here’s what they say the data might mean for the economy and interest rates.
The generally subdued readings for core inflation mean there’s no rush for the Bank of Canada to raise interest rates, said CIBC senior economist Andrew Grantham. He said 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.
The rate, driven by higher gasoline prices and airfares, shouldn’t be a concern to policymakers at the Bank of Canada, Grantham said.
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He noted that the acceleration in July could be partly unwound next month, with Statistics Canada suggesting that there was still an impact from the World Cup on fares to the U.S. in July.
The headline reading was a tick higher than consensus expectations, Grantham said, and while there’s still plenty of uncertainty regarding future oil and gasoline price moves, so far average prices in August are tracking close to July’s level, which should see headline inflation hold at or close to July’s print.