Canada’s Inflation Increases to 4% in August

In August 2023, Canada’s inflation surged to 4.0% year-over-year, up from July’s 3.3%, driven mainly by a 0.8% increase in gasoline prices compared to a 12.9% drop in July, says Statistics Canada in its monthly Consumer Price Index report.

Excluding gasoline, the CPI maintained a strong 4.1% rise, mirroring July’s figures, indicating significant inflationary pressure. While higher energy costs, increased rent, and mortgage interest rates added to inflationary pressures, travel-related services and slightly slower food price growth helped moderate the overall CPI increase.

Here are the highlights of the August Consumer Price Index report:

Monthly CPI Growth Slows

The CPI increased by 0.4% on a monthly basis in August, down from the 0.6% rise in July.
The slowdown was driven by declines in travel tours (-6.4%) and air transportation (-6.9%) as summer travel demand peaked in July.
When seasonally adjusted, the CPI still rose by 0.6% on a monthly basis.

Gasoline Prices Rebound Year Over Year

Gasoline prices saw a year-over-year increase of 0.8% in August, marking the first yearly gain since January 2023, following a 12.9% drop in July.
This rebound was partly due to a base-year effect, with prices falling sharply in August 2022.
On a monthly basis, gasoline prices rose by 4.6% due to higher crude oil costs from production cuts by major oil-producing nations.

Shelter Costs on the Rise

Shelter prices surged by 6.0% year over year in August, with rent prices leading the way, rising 6.5% nationally.
A higher interest rate environment posed barriers to homeownership, contributing to the rent increase.
Mortgage interest costs also rose at a slightly faster pace in August (+30.9%) compared to July (+30.6%).

Grocery Prices Moderate

Credit: Statistics Canada/Consumer Price Index, August 2023

Grocery price growth slowed in August, with a year-over-year increase of 6.9% compared to 8.5% in July.
Prices for fresh fruit, cereal products, and fresh or frozen chicken increased at a slower pace.
Conversely, consumers paid more for fresh or frozen beef, coffee, tea, sugar, and confectionery.

Regional Highlights

Credit: Statistics Canada/Consumer Price Index, August 2023

In August, prices increased at a faster pace in every Canadian province year over year.
Alberta saw the most significant increase in energy prices, up 13.3% YoY, following a 7.7% decline in July.
Natural gas prices in Alberta fell less in August (-12.5%) than in July (-32.7%).
Electricity prices spiked 121.7% YoY in August after provincial rebates ended in spring 2023.