Canada Economics Comment Headline and Core Surprise to the Upside on Energy Prices and World Cup Effects

Economics Research 17 August 2026 | 3:16PM BST

Canada Economics Comment: Headline and Core Surprise to the Upside on Energy Prices and World Cup Effects

BOTTOM LINE: Headline CPI increased by +3.0% yoy in July, above consensus Megan Peters | expectations for a smaller 2.9% increase. The average of the preferred measures Goldman Sachs International (CPI-Median and CPI-Trim) edged up to +2.0% (vs. +1.9% in June), with both CPI-Trim and CPI-Median surprising to the upside. Excluding food and energy, monthly inflation moved sideways at +0.3% in July, reflecting strength in categories exposed to the World Cup and higher airfares. Monthly services inflation was unchanged at +0.3% in July (mom top-down GS sa) while sequential core goods inflation edged up to +0.1% (vs. +0.0%). We estimate that sequential inflation for non-shelter wage-sensitive categories ticked up by 0.2pp to +0.3%. Today’s upside surprise was largely driven by higher energy prices and a temporary boost to some World Cup-related categories. The BoC’s preferred statistical measures—which trim out these outliers—now stand close to 2% on a sequential three-month basis, pointing to a normalization after undershooting in the first half of the year. We continue to see little urgency for the BoC to adjust policy and expect it will remain on hold at 2.25%—the bottom end of its neutral rate range—in 2026.

CPI (yoy) +3.0% for July, median forecast +2.9%, GS +2.8%, prior +2.8%

CPI ex food and energy (yoy) +1.9% for July, median forecast +1.8%, GS +1.5%, prior +1.8%

CPI-Trim (yoy) +1.9% for July, median forecast +1.8%, prior +1.9%

CPI-Median (yoy) +2.0% for July, median forecast +1.9%, prior +1.9%

CPI (mom sa) +0.3% for July, prior -0.1%

CPI ex food and energy (mom sa) +0.3% for July, prior +0.3%

1. Headline CPI increased by +3.0% yoy in July, above consensus expectations for a smaller 2.9% increase. Inflation accelerated on a year-over-year basis for five out of eight major categories. The largest increases were in transportation (+1.1pp to +7.8%), clothing (+0.9pp to +2.4%), recreation (+0.6pp to +4.4%) and household operations (+0.6pp to +0.4%). The release noted that strength in recreation reflected higher prices for travel tours, driven by more expensive hotels and flights to US cities hosting World Cup matches, although prices for traveler accommodation pulled back sharply following a World Cup-related uptick in June. Higher transportation inflation reflected higher gasoline prices and higher airfares due to elevated jet fuel costs. Year-over-year inflation slowed in the food (-0.5pp to +3.0%), shelter (-0.2pp to

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Goldman Sachs Canada Economics Comment

+1.3%) and health and personal care (-0.2pp to +2.3%) categories. Excluding food and energy, CPI inflation ticked up to +1.9% in July (vs. +1.8% in June), above consensus expectations for an unchanged rate. On a yoy basis, CPI-Median ticked up by 0.1pp to +2.0% and CPI-Trim was unchanged at +1.9%.

2. On a three-month average annualized basis, CPI-Median ticked up by 0.2pp to +1.8% and CPI-Trim ticked up by 0.4pp to +2.2%. On a month-over-month annualized basis, CPI-Median increased to +2.7% (vs. +1.1% in June) and CPI-Trim increased to +2.8% (vs. +1.1%).

3. On a seasonally adjusted monthly basis, CPI inflation accelerated in four out of eight major categories. The largest increase was in transportation (+1.8pp to +0.8%), with smaller increases in household operations (+0.2pp to +0.4%), food (+0.1pp to +0.1%) and health and personal care (+0.1pp to +0.2%). Monthly inflation slowed for recreation (-0.4pp to +0.4%) and alcohol and tobacco (-0.1pp to +0.3%). Seasonally adjusted monthly CPIX inflation, which excludes eight of the most volatile components and the effect of indirect tax changes, moved sideways at +0.2%. On a year-over-year basis, CPIX inflation edged up by 0.1pp to +2.2%.

4. Sequential services inflation was unchanged at +0.3% in July (mom top-down GS sa), reflecting a sharp uptick in inflation for communications (+3.0%), which was…