Canada’s inflation rate increased to three percent in July, driven by escalating tensions in the Middle East that pushed gas prices higher. Recent data from Statistics Canada revealed that gas prices surged by 25.7 percent year-over-year in July, outpacing the 20.5 percent growth seen in June.
The disruptions in the Strait of Hormuz and the partial closure of shipping routes in the Red Sea were identified as key factors influencing energy prices, according to the data agency. The temporary ceasefire in the Middle East the previous month had helped stabilize gas prices, leading to a slight drop in inflation to 2.8 percent in June.
Excluding gas prices, the consumer price index rose by 2.2 percent in July for the third consecutive month, as reported by Statistics Canada. The three percent inflation rate slightly exceeded economists’ expectations, who had anticipated a rise to 2.9 percent.
Travel tour costs surged in July, driven by higher hotel rates and increased flights to U.S. destinations during the FIFA World Cup, the data showed. Rising jet fuel prices also contributed to the 12 percent year-over-year increase in air transportation costs 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 dropping to 3.1 percent in July, down from 3.9 percent in the previous month. Slower growth in fresh vegetables, chicken, and cereal products contributed to the overall decline in food prices. However, fresh fruit prices accelerated to 6.1 percent, driven by soaring costs for berries and melons.
Despite the positive trends in food prices, Statistics Canada highlighted that grocery price inflation has surpassed the all-items consumer price index for 18 consecutive months.
