Canada Inflation Research Brief

Annual price growth hits 40-month low. Canada’s consumer price index rose by 2.5 per cent in July, down from the 2.7 per cent reading in June and marking the lowest year-over-year print since March 2021. Cooling price pressures were broad-based, as the Bank of Canada’s preferred measures of core inflation — CPI-median and CPI-trim — also eased to 2.4 per cent and 2.7 per cent, respectively. The softer July gains in these core measures suggest that the previous two months reflected normal volatility rather than a stalling of downward momentum. In addition, when stripping out shelter — one of the largest contributors to elevated price growth — inflation sat at a meager 1.2 per cent. With core inflation now on track to be below the central bank’s forecast, along with underlying details showing promising progress, further interest rate cuts are almost all but certain over the remaining three policy meetings of 2024.