While the US and UK grapple with hotter inflation, Canada delivered a rare dose of relief: July inflation cooled to 1.7%, well below both June and expectations. A 16% drop in gasoline prices more than offset rising costs for food and shelter, with food inflation creeping up to 3.3%. The Canadian dollar softened as odds of a September rate cut jumped from 32% to 40% (see how markets are recalibrating).
But there’s a catch: Over 37% of household expenses are still rising faster than the central bank’s 3% upper target. Analysts warn tariff-driven supply chain disruptions could push costs higher again, especially if US-Canada trade friction accelerates. The Bank of Canada remains “data-dependent” as the global inflation picture grows more fractured.
