Canada July inflation cools to three-year low of 2.5%

(FILES) Pedestrians walk past the Bank of Canada in Ottawa, Ontario, Canada, on July 12, 2023. – Canada’s inflation rate fell 0.2 percentage points in July to 2.5 percent, its lowest level in more than three years, the national statistical agency said August 20, 2024. (Photo by Dave Chan / AFP)

Ottawa, Canada — Canada’s inflation rate fell 0.2 percentage points in July to 2.5 percent, its lowest level in more than three years, the national statistical agency said Tuesday.

The drop, expected by economists to increase pressure on the Bank of Canada to further cut its key lending rate, was led by lower prices for travel tours, passenger vehicles and electricity.

“With inflationary pressures fading away but concerns about the weakening labor market growing, we continue to forecast three further 25 basis point cuts by the Bank of Canada at (its) remaining meetings this year,” CIBC Economics analyst Andrew Grantham said in a research note.

READ: Inflation in Canada slows to 2.7% in June

The inflation reading, echoed RBC economist Claire Fan, “should be enough to quell concerns about sticky inflation pressures in Canada after two marginal upside surprises in May and June.”

The inflation data was also welcomed by Prime Minister Justin Trudeau, whose liberal government has faced a backlash over high prices.

“We’ve still got a lot more work to do to make sure Canadians feel that relief in their bank accounts. But inflation is cooling, and that’s welcome news,” he said on X.

Inflation last month increased at its slowest pace since March 2021, according to Statistics Canada, while the jobless rate remained stuck at 6.4 percent.

Prices fell year-over-year for hotel accommodations and air transportation.

Shelter prices rose at a slower rate than the previous month with downward pressure coming from electricity, mortgage interest costs, rent and fuel oil.

Gasoline prices, meanwhile, rose at a faster pace in July.