The Current Inflation rate in Canada is 2% as of August 2024
Consumer Price Index Growth Slows to Lowest Level in Over Three Years
Canada’s inflation rate hit the Bank of Canada’s 2% target in August, marking the slowest annual growth in more than three years. According to Statistics Canada, the Consumer Price Index (CPI) has cooled to levels not seen since February 2021. This is a significant milestone, as inflation has been a key focus for both economists and the central bank.
Two key inflation indicators that the Bank of Canada closely monitors have also shown signs of moderation. CPI-trim fell to 2.4%, down from 2.7%, while CPI-median dipped slightly to 2.3%, a drop of 0.1%. These figures came in lower than analysts had anticipated, with a Reuters poll predicting a CPI rate of 2.1% for the month.
A primary factor contributing to the easing of inflation has been lower gasoline prices. However, other inflationary pressures have also shown signs of subsiding. One area of concern that remains is shelter costs, which continue to rise. Rent prices saw an increase of 8.9% year-over-year, while mortgage interest costs surged 18.8% compared to the same period in 2023.
The latest inflation data arrives as the Bank of Canada has made a series of interest rate cuts over the summer, lowering its benchmark rate by 75 basis points through three consecutive reductions. This has sparked discussions about the potential for further rate cuts in the coming months.
Economists Nathan Janzen and Abbey Xu from RBC noted in a recent report that the Bank of Canada is likely to continue its gradual approach to rate reductions, forecasting 25 basis point cuts at each meeting. They also suggested that the central bank could introduce larger cuts if economic conditions worsen significantly.
