Canada’s inflation rate reached three percent in July, driven by escalating tensions in the Middle East which caused gas prices to surge. Statistics Canada reported that the cost of gas rose by 25.7 percent year-over-year in July, compared to a 20.5 percent increase in June. The agency attributed the rise in energy prices to disruptions in shipping routes in the Red Sea and the blockade in the Strait of Hormuz.
Excluding gas, the consumer price index increased by 2.2 percent in July for the third consecutive month. Economists had anticipated a slight uptick in inflation to 2.9 percent, making the actual three percent figure slightly higher than expected.
Travel tour expenses also saw a spike in July, with higher prices for hotels and flights to U.S. destinations during the FIFA World Cup contributing to the overall increase. Rising jet fuel costs led to a 12 percent year-over-year increase in air transportation prices in July, up from 9.6 percent in June.
On the other hand, food prices helped alleviate cost pressures, with inflation for food purchased from stores decreasing to 3.1 percent in July from 3.9 percent in the previous month. Slower growth in fresh vegetables, chicken, and cereal products contributed to the decline in food prices, while fresh fruit prices accelerated to 6.1 percent due to soaring costs for berries and melons.
Despite the positive trend in food prices for the month, Statistics Canada highlighted that grocery price inflation has surpassed the all-items consumer price index for 18 consecutive months.
