Canada Inflation Slows More than Expected

The headline inflation rate in Canada inched higher to 3% in July of 2026 from 2.8% in the previous month, slightly above market expectations of 2.9%, but remaining below the post-Iran-war peak of 3.2% from two months prior. Gasoline price inflation accelerated to 25.7% from 20.5% in the previous month, tracking wholesale oil and refined product markets globally as strikes between Iran and the US reignited in the period and triggered blockades on tankers in the key region. In turn, core inflation rates tracked by the Bank of Canada inched slightly higher, with the median core rate up at 2% and the trimmed-mean rate at 1.9%. Upward pressure was noted from travel tours (15.2% vs 6.8%) amid higher prices for flights and accommodation due to the FIFA World Cup taking place in North America. Still, prices eased for food (3.0% vs 3.5) and shelter (1.3% vs 1.5%). From the previous month, consumer prices rose by 0.5%, rebounding from the 0.4% drop in the earlier period.

The headline inflation rate in Canada fell to 2.8% in June of 2026 from the over-two-year high of 3.2% in the previous month, slightly under market expectations of 2.9%. The drop was consistent with a slower surge in prices of gasoline (20.5% vs 33.2% in May), trimming inflation for overall transportation (6.7% vs 9.0%), as the momentary restoration of energy exports from the Middle East had eased wholesale fuel prices. Price growth also eased for food (3.5% vs 3.8%) amid softer inflation in grocery stores. Meanwhile, the median core (1.9% vs 2.1%) and the trimmed-mean (1.8% vs 2%), both key core rates tracked by the BoC, fell more than expected to their lowest in over five years. Inflation fell for shelter (1.5% vs 1.7%) and health and personal care (2.5% vs 2.7%), while prices dropped for household operations, furnishings, and equipment (-0.2% vs -0.2%). From the previous month, the Canadian CPI fell by 0.4% amid a 10.2% drop in gasoline prices.

The headline inflation rate in Canada rose to 3.2% in May of 2026 from 2.8% in the previous month, ahead of market expectations of 3% and the 2.8% rate from the previous month to mark the fastest inflation rate since December 2023. The increase was largely due to a surge in gasoline inflation (33.2% vs 22.8% in April) as the war in the Middle East suspended energy exports from the key region, lifting broader energy costs in Canada by 9% (vs 7.6%). Meanwhile, food inflation picked up to 3.8% from 3.5% amid a 5.3% jump for fresh fruit and 9% increase for vegetables, aligned with higher prices for fertilizers. Still, underlying inflation rates tracked by the BoC remained steady, with the trimmed-mean core rate at 2% and median core rate at 2.1%. Inflation edged lower for shelter (1.7% vs 1.8%) and health and personal care (2.7% vs 3.3%), and prices dropped for household operations (-0.2% vs 0.4%). The Canadian CPI rose 1% from the previous month.