New Age | Canada's inflation cools to three-year low of 2.5 percent in July

The inflation rate in Canada fell by 0.2 percentage points to 2.5 percent in July, the lowest level in more than three years, the national statistics office said on Tuesday.

The decline, which economists say will increase pressure on the Bank of Canada to further cut its key interest rate, is due to lower prices for travel, cars and electricity.

“With inflation pressures easing but concerns about a weakening labour market growing, we continue to forecast three more 25 basis point rate cuts by the Bank of Canada at its remaining meetings this year,” Andrew Grantham, analyst at CIBC Economics, said in a research note.

The inflation numbers, said RBC economist Claire Fan, “should be enough to allay concerns about continued inflationary pressures in Canada after two small positive surprises in May and June.”

According to Statistics Canada, inflation rose last month at the slowest pace since March 2021, while the unemployment rate remained at 6.4 percent.

Compared to the previous year, prices for hotel accommodation and air travel have fallen.

Housing prices rose more slowly than in the previous month. The downward pressure came from the costs of electricity, mortgage interest, rent and heating oil.

Gasoline prices, however, rose faster in July.