Today’s Consumer Price Index (CPI) report shows that the national inflation rate* decreased for the third reading in a row, going from 2.5% in July to 2.0% in August. Inflation has been within the Bank of Canada’s target range of 1% to 3% since January.

Shelter costs were the main driver of year-over-year price growth in August with the inflation rate excluding the shelter components coming in at just 0.5%.

Core inflation also cooperated in August, with both of the Bank of Canada’s “preferred” measures of core inflation (CPI-median and CPI-trim) falling in August. The median measure edged down 0.1 percentage points to 2.3%, and the trim down 0.3 points to 2.4%.

The slower rate of price growth is a welcome reprieve for consumers, but the cumulative impact of elevated inflation has not gone away with prices 13.5% higher than three years ago. A more typical rate of cumulative price growth over a three-year period would be around 5 or 6%.

Barring an unexpected change in the downward trajectory of the national inflation rate, our call is for two more 25-basis point interest rate cuts this year (one on October 23 and one on December 11) and four more next year, bringing the policy rate down to 2.75%.

The inflation rate in Alberta dropped from 2.7% in July to 2.0% in August—matching the national average and the lowest since June 2023.

The breakdown for the two largest centres in Alberta shows Calgary’s inflation rate at 2.3% vs. 1.7% in Edmonton in August, with Calgary recording faster growth in shelter costs.

*The inflation rate is the year-over-year percent change in the unadjusted monthly Consumer Price Index.

Answer to the previous trivia question: India may have surpassed China in population, but China is significantly larger in terms of its land area at about 9.4 million square kilometres compared to about 3.0 million for India.

Today’s trivia question: What is the title of the Pulitzer-winning book by William Golding that was published on this day in 1954?