Canada’s inflation rate cooled to seven per cent in August, Statistics Canada said Tuesday.
Economists had been expecting the rate to come in at 7.3 per cent, after inflation rose to a 40-year high of 8.1 per cent earlier this summer.
Instead, the rate fell by even more than expected, in large part because gasoline got much cheaper during the month.
Gas prices fell by 9.6 per cent in August from where they were the previous month. That is the biggest one-month drop in gasoline prices since April 2020, when the pandemic was just beginning.
While gasoline got a little cheaper, food prices continued their increase — the cost of groceries has risen by 10.8 per cent in the past year.
That’s the fastest increase in the typical grocery bill since 1981.
“The supply of food continued to be impacted by multiple factors, including extreme weather, higher input costs, Russia’s invasion of Ukraine and supply chain disruptions,” the data agency said.
Shelter prices also edged down for the first time since January 2021, as the impact of falling house prices more than offset higher mortgage rates.
The decline in the inflation rate will come as a relief to the Bank of Canada, which has been aggressively raising its benchmark interest rates trying to bring the number down to a range it’s more comfortable with, which is around three per cent.
Beneath the headline number decline, there were more encouraging signs that underlying inflation may be starting to ease. So-called core inflation — which strips out volatile items like food and energy — fell to 5.2 per cent, down from 5.4 per cent the previous month.