Canadian Inflation Hits BoC Limit As Broad Price Pressures Accelerate

Rising prices are starting to push inflation to the boundary of the central bank’s comfort zone. Statistics Canada’s (StatCan) Consumer Price Index (CPI) shows growth accelerated in July. The upward pressure is primarily attributed to gas prices, but most components accelerated. The only thing keeping inflation in check is housing, apparently. Canadian Inflation Accelerates To 3%, The BoC’s Upper Bound The annual growth of the Canadian consumer price index (CPI). Source: StatCan. CPI’s annual growth accelerated to 3% in July, following a 2.8% increase reported in June. Gasoline was the primary driver of growth, with the rate accelerating from 20.5% in June to 25.7% last month. Excluding gasoline, CPI advanced 2.2% y/y for a third straight month. Energy isn’t the only story here. Headline inflation is sitting at the Bank of Canada’s 3.0% upper bound, making it more difficult for the central bank to ease policy. At the same time, CPI is starting to accelerate more broadly. Not Just Gas: Canadian Inflation Accelerated In Most Components The annual growth of the 8 major Canadian consumer price index (CPI) components. Source: StatCan. The agency notes that 5 of the 8 major CPI component...