RBC Previews This Week's Inflation Data in Canada

09:09 AM EDT, 08/18/2025 (MT Newswires) -- Canadian year-over-year consumer price index growth is expected to hold at 1.9% month over month in July, matching June's reading on Tuesday, said RBC.

Canada is slated to release July's CPI data at 8:30 a.m. ET on Tuesday.

The details will be closely monitored by policymakers as the removal of the consumer carbon tax from most provinces in April continues to artificially lower headline inflation, noted the bank. Underlying trends have surprised upward this year, partly due to tariff impacts on products like food and vehicles, but also from higher prices for domestic services.

The bank expects these trends continued in July. Gasoline prices decreased 0.7% from June and 15% from July 2024. Food prices, affected by Canada's retaliatory tariffs, likely remain about 3% above last year. Prices excluding food and energy are expected to have increased slightly to 2.7% year-over-year, up from June's 2.6%.

The Bank of Canada will focus on its preferred core measures that account for indirect tax changes. RBC estimates CPI-trim and CPI-median measures to hold at about 3% year-over-year -- still at the top end of the BoC's 1% to 3% target range for inflation. However, the three-month rolling average growth should improve as a large increase in April falls out of that shorter time horizon calculation.

Overall, firm underlying inflation is likely connected to resilient Canadian consumer spending, stated the bank.

RBC continues to project the BoC will maintain current interest rates given limited further deterioration is expected in the labor market, additional fiscal stimulus will offset tariff impacts, and inflation is running at the upper limit of the central bank's target range.

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