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Canada’s Inflation Slows in August, Boosting Odds of Rate Cut
People browse a grocery store in Toronto, Ontario, Canada
Canada’s annual inflation rate edged up to 1.9% in August, slightly below economists’ expectations of 2.0%, according to Statistics Canada data. The modest rise was driven largely by a slower year-over-year decline in gasoline prices, which fell 12.7% compared to a 16.1% drop in July. On a monthly basis, the Consumer Price Index (CPI) slipped 0.1%, while the seasonally adjusted measure rose 0.2%.
Excluding gasoline, inflation came in at 2.4%, marking a slight easing from the previous three months’ 2.5% pace. Core inflation indicators showed mixed results: the CPI-median held steady at 3.1%, while the CPI-trim eased to 3.0% from 3.1% in July.
Shelter costs, which make up nearly a third of the CPI basket, rose 2.6%, down from 3.0% in July, as both mortgage interest and rent increases moderated. Food prices climbed 3.4%, with meat prices surging 7.2% year-over-year.
The softer-than-expected inflation reading comes just ahead of the Bank of Canada’s policy decision, with markets now pricing in an 87% chance of a 25-basis-point rate cut. Analysts suggest the data could strengthen the case for easing monetary policy, even as underlying price pressures remain resilient.
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