Statistics Canada reported on Tuesday that the inflation rate in titles rose 1.7% from a year ago, while Statistics Canada reported on Tuesday, up 1.9% from June. Monthly, the Consumer Price Index rose 0.3%.
Core inflation fell to 2.6% from 2.7% last month.
More importantly, the Canadian Bank’s preferred inflation scale (CPI-Median and CPI-Trim) upgraded the CPI-Trim increase for volatile components. CPI-MEDIAN rose to 3.1% at 0.1 percentage point in July, while CPI-Trim remained stable at 3.0% for the third consecutive month.
Bruno Valko of RMG mortgages noted that CPI-Trim “located at the upper part of the Canadian bank’s comfort zone, performing inflation readings.”
Douglas Porter, chief economist at BMO, pointed out that core inflation has shown “incredible stability”, with core inflation rising exactly 0.2% in each of the past three months. Despite this, he saw a glimmer of hope.
“…it also means that the three-month trend for each trend has reached a reasonable annual rate of 2.4%,” he wrote. “This coincides with the MPR’s view that the base inflation rate is close to 2.5%, with the former food and energy CPI and the former accelerator CPI also landing on the trademark in July.”
TD economist Andrew Hencic said the key point of the data is the “a trend of core inflation that is softer”, suggesting that price pressures encountered from “economic slackness”.
BOC is unlikely to be inflation alone, but broader conditions may force it to
Although title inflation has eased, economists say the data may not be enough to push Canadian banks to lower interest rates on September 17.
Derek Holt of Scotiabank said CPI issuance is only a big challenge, which also includes upcoming GDP, inflation and working data before making a decision. “I’m sure we’ll get some market noise in the consequences, but none of the BOC decisions about September are up in the balance in this book,” he wrote.
He added: “More data are inclusive of GDP … plus another employment report, as well as further developments in other factors and fiscal policy.”
But other economists see the latest data as helping to lay the stage in September’s cuts.
Hencic noted that growing trade tensions, weakening labor markets and lower core inflation are factors supporting lower tax rates this fall. “It looks like the BOC scenario emphasizes, which raises demand for ‘the need to further lower policy rates’,” he wrote.
According to CIBC economist Andrew Grantham, if the August inflation data released before the next rate decision shows a similar trend, policy makers may be willing to lower interest rates by 25 basis points at their September meeting.
Porter said Canadian banks will need “downward surprises” to trigger a tax reduction, but added that if the recent core trends are in place and the economy remains soft, it may “ultimately lay the foundation for BOC cuts.”
Shortly after the release, five-year bond yields fell by four basis points, accounting for 2.96%.
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Andrew Hencic Bank of Canada Brett Surbey Bruno Valko Core Inflation CPI-MEDIAN CPI-TRIM DEREK Holt Douglas Porter Porter Lower Forecast
Last modified: August 19, 2025
