Canada’s inflation rate just hit its lowest point in over three years, which could pave the way for another interest rate cut in September. This morning, Statistics Canada reported that inflation hit 2.5% in July, down from 2.7% in June and an inch closer to the Bank of Canada’s 2% target. The main drivers behind the dip were slower increases in travel services and car prices. For instance, the cost of travel tours fell by 2.8% in July, compared to a 7.4% rise in June. Car prices also dropped by 1.4%. But don’t send out invites for a road trip just yet. While buying a car got cheaper, gas prices took a leap, jumping by 1.9% in July. This price hike was particularly painful in the Prairie provinces, thanks to a gas supply hiccup from a U.S. refinery shutdown last month. This is the last read on inflation before the Bank of Canada’s decision on interest rates on Sept. 4, and today’s numbers are a positive sign that inflation is cooling further. Analysts are confident we’ll see a rate cut next month, and are even betting on another two 25-basis-point cuts by the end of the year.
