Ottawa – Tariff effects are expected to keep the underlying inflation elevated in July, calling an economist, a desjardins, even if the headline figure is a retreat.
Statistics Canada is set to report inflation data for July on Tuesday. According to LSEG Data and Analytics, a survey of economists hopes that the annual inflation has increased to 1.7 percent last month.
The annual rate of inflation in the June consumer price index was up to 1.9 percent.
Randel Bartlett, Deputy Economist of Desjardins, said he hopes that the headline inflation figure in July has slowed down by 1.6 percent beyond expectations as low energy costs take out of steam from pressure.
He said in an interview, “We are hoping that whatever we saw in June will be a bit soft. Therefore, from the perspective of a headline, it is overall positive news for Canadian people,” he said in an interview.
RBC is above the consent of economists, the July annual inflation is expected to match the 1.9 percent of the 1.9 percent seen in June.
Economist Nathan Jenjen and Claire Fan wrote to customers on Friday in a note that in early April, to remove consumer carbon value, “artificially low headline inflation has been continued.”
But he warned that the price pressure below the surface should remain stubborn in July.
“The underlying trends have surprised upwards this year, partially due to tariff effects on products such as food and vehicles, but also from high prices for domestic services,” Jenjen and Fan wrote.
According to the statistics Canada, the bank of Canada’s core inflation preferred matrix exceeded three percent in June.
Bartlett stated that Desjardins kept these matrix between 2.5 percent and three percent for the rest of the year as Canada’s tariff dispute with the United States has raised prices.
He said that he would like to see whether the business cost more than tariffs on consumers in July.
The Consumer Price Index data of the United States appeared showing a tariff effect in the form of high prices for shoes and furniture last week.
While he believes the bulk of tariff price effects was passed in April and May, Bartlet said that Canada would feel a pinch from the border levy on food and durable items.
“It is constantly going upwards on the price increase in Canada,” he said.
Bank of Canada kept its benchmark interest rate stable at 2.75 percent on July 30, as it waits for more information about how the Canada-US trade dispute is affecting the economy.
Summary of discussion from that decision released last week is careful with the impact of tariff on Central Bank’s Governing Council inflation.
Members indicated in those minutes that the impact on consumer prices appeared “so far,” but the tariff effect is only starting to appear in data.
While the expectations of inflation of businesses remain well, the Governing Council said that the cost of finding new suppliers between transferring global trade may still increase prices.
“Overall, the members agreed to assess that it was still very early to assess how the tariffs and trade recurrence would affect economic activity and inflation in Canada,” read the summary.
Bartlett stated that he hopes that the economic figures will cut the interest rate of a quarter points in the next decision of Bank of Canada on 17 September.
But this is under control of core inflation reading in the upcoming CPI release for July and August.
“If we see that inflation is less than a tariff, we are expecting … we think there is an opportunity for Bank of Canada to cut further,” he said.
This report of Canadian Press was first published on August 17, 2025.
Craig Lord, Canadian Press