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Aug 19, 2025
Canada's annual inflation rate hits 1.8% in July
Inflation falls amid persistent underlying pressures
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On August 19, 2025, at 4:30 PM UAE time, Canada announced its annual Consumer Price Index (CPI) data for July. The data revealed a decline in the annual inflation rate to 1.8%, compared to 1.9% in June, reflecting a slight but significant decline in price pressures. Conversely, core inflation—measured by the median and headline—is expected to remain near 3%, putting continued pressure on the Bank of Canada's 2% monetary target. |
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Analysis and Impact:
The decline in annual inflation may give the central bank room to further tighten or delay interest rate hikes.
High core inflation keeps the Bank of Canada on alert and may lead to a rate cut at its next meeting on September 17, as the market sees a 68% probability of no change to the current rate (2.75%).
In addition, the rise in oil prices to $63.11 per barrel is supporting the Canadian dollar and easing some external inflationary pressures.