Inflation reaccelerated in July ’26 after another volatile month for global energy prices. However, economists argue that the latest data was mild enough that the Bank of Canada (BoC) can focus on looming trade risks rather than fears of spreading price hikes.
Statistics Canada (StatCan) said on Monday, 17 August ’26, that the annual rate of inflation to 3% last month was up from 2.8% in June. It also exceeds economists’ expectations.
Global energy volatility was primarily to blame for this increase. A ceasefire agreement struck between the U.S. and Iran in June ’26 began to unravel a month later in July. The ceasefire agreement undid much of the recent progress in taming global oil prices.
Gas prices were up 25.7% year-over-year in July. StatCan said that the increase was marking an acceleration from the 20.5% annual hike in June.
Deputy chief economist at Desjardins, Randall Bartlett, said that inflation is tracking below the 3% mark so far in August. This was due to the easing of gas prices and the receding of other one-off pressures from earlier in the summer.
Bartlett, however, asserted that getting a sustained decline in global energy prices is contingent on fully restoring oil flows through the Strait of Hormuz. It’s a critical shipping lane for Guld Exports.
Bartlett added that a significant factor is President Trump’s actions and the situation in the Middle East, excluding the conflict with Iran.
StatCan said that higher jet fuel prices contributed to a 12% hike in the cost of airfares last month. The figure is up from 9.6% in June ’26.
Travel tour costs also accelerated sharply during July ‘26. StatCan attributed the increase to more expensive hotels as well as flights to U.S. destination cities that were hosting FIFA World Cup tournament games.
With the tournament concluded, economists weighing in Monday, 17 August, noted that these pressures are likely to unwind from the inflation data that began in August.
