Canadian inflation was 3% year on year in August, unchanged from July, while food and energy prices remained elevated but showed some easing. Core gauges stayed closer to the 2% objective: CPI excluding food and energy, as well as the Bank of Canada’s CPI-trim and CPI-median, were described as remaining near target. The report indicated comparatively contained underlying pressures and limited evidence that higher energy costs were feeding into broad second-round inflation.
Inflation Dynamics And Core Measures
Canadian inflation was 3% year on year in August, unchanged from July, while food and energy prices remained elevated but showed some easing. Core gauges stayed closer to the 2% objective: CPI excluding food and energy, as well as the Bank of Canada’s CPI-trim and CPI-median, were described as remaining near target. The report indicated comparatively contained underlying pressures and limited evidence that higher energy costs were feeding into broad second-round inflation.
Outlook For Interest Rates And Conditional Risks
The rate outlook described in the report remained stable, with the base case pointing to the Bank of Canada holding policy rates through the rest of 2026 and then moving to gradual increases in 2027 as the economy strengthens. It also set out a conditional risk: if oil prices stay elevated for longer, the possibility of pass-through could rise, shifting attention from month-to-month headline moves to the breadth and persistence of underlying price pressures.
