Canada August CPI 3.0% y/y vs 3.0% expected

Canada's Consumer Price Index (CPI) rose 3.0% year-over-year in August, matching economists' expectations and holding steady from the prior month's 3.0% reading. On a monthly basis, CPI edged down 0.1% month-over-month compared to the flat 0.0% expected. Core inflation measures presented a mixed picture, with the Bank of Canada (BOC) core reading coming in at 2.4% year-over-year versus 2.3% anticipated, while CPI median and CPI trim matched forecasts at 2.0% and 1.9% respectively. CPI common moderated slightly to 2.6% from 2.7% prior. The marginally softer inflation metrics, alongside a contraction in July manufacturing sales of -0.4%, prompted a decline in the Canadian dollar. Market participants reduced their expectations for an October interest rate hike by the Bank of Canada, which had been priced at a 58% probability before the data release. Despite near-term softness, upside inflation risks persist as gasoline prices have climbed substantially into September, even with a temporary federal fuel tax holiday in place.