Inflation Eases in Canada Amid Lower Gas Prices

Canada's inflation rate declined to 1.7% in July, influenced by a significant drop in gasoline prices. While the core inflation measures remained steady, costs for food and shelter rose. This placed the overall consumer price index below the midpoint of the Bank of Canada's target range.


Devdiscourse News Desk | Updated: 19-08-2025 18:07 IST | Created: 19-08-2025 18:07 IST
Inflation Eases in Canada Amid Lower Gas Prices
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Canada witnessed a decline in its annual inflation rate to 1.7% in July, down from 1.9% the previous month, as falling gasoline prices continued to exert downward pressure on the consumer price index (CPI). This trend was highlighted in data released Tuesday, partly diverging from analysts' forecasts that anticipated a 1.8% annual inflation rate along with a 0.3% monthly inflation increase.

While gasoline prices experienced a drastic 16.1% year-on-year drop in July, easing geopolitical tensions and escalated output from oil-producing nations contributed to this descent. Additionally, the removal of a carbon levy on petrol purchases supported the reduction in fuel costs, maintaining downward pressure on the CPI basket for potentially the next eight months.

Despite these reductions, core measures of inflation, closely monitored by the Bank of Canada, hold steady, with some components nearing the higher limits of the bank's target range. The CPI-trim was unchanged at 3%, and the Canadian dollar weakened slightly, trading at 1.3817 per U.S. dollar, while two-year government bond yields declined modestly.

(With inputs from agencies.)

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