Canada’s headline inflation rate rose to 3 percent in July, the top of the Bank of Canada’s 1-to-3-percent control range. Inflation excluding gasoline held at 2.2 percent for a third consecutive month, indicating that the 25.7 percent increase in gasoline prices was the dominant driver of the headline figure, with little evidence of broadening price pressures. For the Bank to continue looking through the persistent energy shock, it will have to ensure inflation expectations remain well-anchored.
For more on headline and underlying inflation, see this Kronick, Ambler and Koeppl report.
