Canada Inflation Research Brief

Inflation risks largely mitigated. Canada inflation rose 2.0 per cent in August, down from the 2.5 per cent gain in July. Not only was this the slowest pace of increase since February 2021, but August’s inflation print was also back down to the central bank’s target measure. The deceleration in headline inflation was due in part to lower prices and a favourable yet transitory base-year effect for gasoline, which could cause annual price growth to inch up again over the short-term. Nevertheless, the release provides further evidence that the inflation battle is almost won. When excluding gasoline, inflation rose by 2.2 per cent in August, down from the 2.5 per cent mark in July. Additionally, the Bank of Canada’s preferred measures of core inflation – CPI-median and CPI-trim – also eased to 2.3 per cent and 2.4 per cent, respectively. Looking ahead, further rate cuts at the Bank’s remaining two meetings in 2024 are almost all but guaranteed, fueling further optimism for commercial real estate investors.