TORONTO – Inflation in Canada increased in August, but less than some economists expected. However, the price rise continues. According to data released today by Statistics Canada (here the whole report), inflation for consumer goods and services, measured by the consumer price index, was 1.9% in August compared to the same month last year. Economists, as we said, had expected a slightly higher rate: 2%, up from 1.7% in July.
Consumer price inflation measures the increase in prices for consumers over a given period, and recent tariff policies and the trade war with the United States have certainly led to higher costs for some products and services, which can be reflected in higher inflation.
“Inflation is on the uptick again in more ways than one. Peel away the fuel prices — distorted in the wake of the axed carbon tax — and you get a more accurate picture of stubborn, sticky inflation that’s running hotter than we’d like” says personal finance expert Shannon Terrell of NerdWallet Canada in a statement published by Global News. “Food inflation remains alive and well with beef prices tipping the scales at gains of over 12 per cent, year-over-year…” she adds. So, where are food and gasoline prices? Statistics Canada says gasoline prices in August contributed the most to overall inflation, which was higher than in July. The agency says gasoline prices increased 1.4% in August compared to July. And compared to last year, fuel prices in Canada fell 12.7% in August compared to the same month in 2024—a smaller decline than the 16.1% decline recorded in July compared to the same month last year.
Fuel prices are typically based on a combination of factors, including crude oil supply and demand expectations, as well as economic and geopolitical factors. But national policies and regulations can also influence the prices consumers pay at the pump: the abolition of the carbon tax in April was another factor that led to lower prices in recent months.
Higher food prices also contributed to an increase in overall inflation in August compared to July, especially for certain meat products. Statistics Canada reports that meat prices rose 7.2% overall last month compared to a year ago, following a 4.7% increase in July. Higher prices for fresh or frozen beef (+12.7%) and processed meat (+5.3%) put upward pressure on the index in August. Part of the increase in food costs was offset by declines in the produce sector, with prices for some fresh fruit falling 1.1% compared to August last year, following a 3.9% increase in July. According to the report, prices fell the most for grapes, berries, cherries, and other fresh fruit.
Prices for clothing and footwear rose 1.7% in August, year over year, compared with a 0.8% increase in July. The increase in August was, however, mainly the result of a base-year effect as prices declined by 0.6% in August 2024.
The 1.9% inflation figure is within the Bank of Canada’s target range for consumer price inflation, which is between 1% and 3%. The Bank of Canada’s next interest rate decision is expected tomorrow.
