⛽ Relief at the Gas Pumps
Canada’s annual inflation rate dropped to 1.7% in July, down from 1.9% in June, according to Statistics Canada. The biggest driver? Gas prices, which fell 16.1% year-over-year. This decline was largely due to the removal of the federal carbon price earlier this year. On a monthly basis, gas also slipped 0.7%, with global oil prices falling thanks to higher production from exporting countries and a ceasefire between Israel and Iran.
Statistics Canada. (2025, August 19). Chart 1—The 12‑month change in the Consumer Price Index (CPI) and CPI excluding gasoline. In Consumer Price Index, July 2025. Table 18‑10‑0004‑01.
🛒 Rising Grocery Bills
While gas eased inflation, grocery prices told a different story. Food inflation rose to 3.4% in July (up from 2.8% in June).
Biggest culprits:
- 🍫 Confectionary (+11.8%)
- ☕ Coffee (+28.6%), driven by poor crop conditions in key producing countries
- 🍇 Fresh grapes (+30%), pushing overall fresh fruit prices up 3.9%
🏠 Housing Costs Pick Up
Shelter inflation also nudged higher. 3% in July, compared to 2.9% in June, the first increase since February 2024. Rent growth accelerated, especially in Prince Edward Island, Newfoundland and Labrador, and British Columbia. Lower mortgage rates continued to offset some of the increases. Natural gas prices still fell, but less than in June, mainly due to higher costs in Ontario.
🏦 What It Means for the Bank of Canada
The Bank of Canada is watching closely as it prepares for its next rate decision on September 17.
- Core inflation (which strips out more volatile items like food and energy) stayed near 3% in July.
- This suggests that while headline inflation is easing, underlying price pressures remain.
✅ Takeaway: Gas prices are bringing relief, but grocery and housing costs are keeping inflation sticky in other areas. The Bank of Canada’s September decision could hinge on whether this balance tips toward stability, or continued concern.
Inflation trends and rate updates can feel overwhelming, but you don’t have to navigate them alone. Garland Mortgage is here to help you understand the bigger picture and make informed decisions for your home and future.
💬 Let’s talk about how these changes could impact your mortgage, book a consultation today
