Canada's inflation rises to 3% as gasoline prices drive increase

By Tahani Elghazaly
Published August 17, 2026

Latest news on WhatsApp أجدد الأخبار على واتساب

Canada's annual inflation rate rose to 3% in July 2026, up from 2.8% in June and reaching the upper end of the Bank of Canada's 1% to 3% target range. The Consumer Price Index also increased 0.5% month over month, while economists had expected annual inflation of 2.9%.

Gasoline prices were the largest contributor to the acceleration, rising 25.7% year over year in July, compared with a 20.5% increase in June, amid higher energy costs linked to renewed tensions between the United States and Iran.

Travel costs also contributed to the increase as Canadians paid more for hotels and flights to the United States, particularly to cities that hosted matches during the FIFA World Cup.

Grocery price inflation slowed to 3.1% in July from 3.9% in June, although food purchased from stores continued to rise faster than the overall CPI for an 18th consecutive month. Shelter costs, including rent and mortgage interest expenses, increased 1.3% year over year.

The Bank of Canada's preferred underlying inflation measures remained close to its 2% target, with CPI-trim at 1.9% and CPI-median at 2%. The Bank's policy interest rate currently stands at 2.25%, with its next rate decision scheduled for September 2.