Canada's inflation rate stayed at 3% in August 2026. Gas is still doing most of the lifting.

Canada's annual inflation rate was 3.0% in August 2026, unchanged from July. On an unadjusted monthly basis, consumer prices fell 0.1%, while the seasonally adjusted CPI rose 0.2%.

The headline number is at the top of the Bank of Canada's 1% to 3% target range, but the details are narrower than the headline suggests. Gasoline was 22.8% more expensive than a year earlier, while CPI excluding gasoline rose 2.4%. The Bank of Canada's preferred core measures remained close to 2%.

Source: Statistics Canada, Consumer Price Index, August 2026.

Gasoline is still pushing the average higher

Gasoline prices were 22.8% higher than a year earlier in August, down from a 25.7% annual increase in July. That is the single clearest reason headline CPI is sitting at 3.0% instead of closer to the core readings.

When gasoline is removed, inflation was 2.4%. That does not mean every other price is increasing at exactly 2.4%. It shows how strongly fuel is affecting the national average right now.

The Bank of Canada specifically pointed to gasoline when it held its policy rate at 2.25% on September 2 and said core inflation remained close to 2%.

Grocery inflation is cooling, but grocery prices have not gone back down

Food purchased from stores rose 2.8% over the past year, down from 3.1% in July. Grocery prices are still 29.0% higher than in August 2021, so slower inflation means the basket is getting more expensive at a slower pace, not that it has returned to its old price.

Some category increases in August were:

• fresh fruit: 4.7%
• fresh or frozen pork: 1.6%
• condiments, spices and vinegars: 0.7%
• dairy products: 0.7%, down from 3.1% in July

Rent rose faster while shelter stayed relatively contained

The broad shelter category rose 1.5% year over year. Rent specifically rose 2.8% nationally, up from 2.5% in July, and increased 0.8% from July to August.

Rent rose 4.3% in Manitoba and 2.4% in Ontario. Shelter includes rent and other household costs such as mortgage interest; it does not measure the purchase price of a home itself.

Travel inflation is high, but the annual comparison needs context

Travel tours were 26.1% more expensive than a year earlier, and air transportation was up 15.0%. The annual travel number is amplified by a base-year effect: travel to the United States was unusually weak during the comparison period in 2025, which pushed last year's prices down.

From July to August, travel-tour prices actually fell 2.9%. The annual figure is real, but it should not be read as a one-month 26% jump in the price of every holiday package.

Underlying inflation remains around 2%

Two measures designed to filter out unusually large price movements were close to 2% in August:

• CPI-median: 2.0%
• CPI-trim: 1.9%

CPI-common was 2.6%, while prices excluding food and energy rose 2.1%. Together, these measures show that the August headline pressure is concentrated in energy and a few categories rather than spreading evenly across the economy.

Inflation differs sharply by province

Nova Scotia had the highest provincial reading at 5.1%, followed by New Brunswick at 4.6%. Manitoba and Prince Edward Island were both 4.4%, and Newfoundland and Labrador was 4.3%. Ontario was lowest among the provinces listed here at 2.4%.

Fuel oil and other fuels were 43.7% more expensive nationally than a year earlier, helping explain why fuel-heavy Atlantic provinces are running above the national rate.

What does this mean for the Bank of Canada?

The August report does not create an obvious case for an immediate rate increase. The Bank of Canada is holding its policy rate at 2.25%, and its September 2 announcement described the 3% headline as largely gasoline-driven while core inflation remained near 2%.

The next test is whether higher fuel and import costs start spreading into services, wages, groceries and other categories. The August release does not show that broad shift clearly yet.

Statistics Canada will release September CPI on October 19, 2026. The Bank of Canada's next scheduled rate decision is October 28, 2026.

Update note: This evergreen article was updated for the August 2026 CPI release on September 15, 2026. Future monthly releases will update this same `/blog/canada-inflation` page rather than create a dated replacement.

Chart alt text: Annual Canadian inflation measures for August 2026, with headline CPI at 3.0% and core measures near 2%.