08:47 AM EDT, 08/20/2024 (MT Newswires) -- Canadian inflation Tuesday continued to ease in July, keeping the door to further interest rate cuts wide open, noted CIBC.

Headline inflation eased to 2.5% year-over-year, on the back of a 0.4% non-seasonally adjusted (NSA) or 0.3% seasonally adjusted (SA) increase in prices on the month, with both of those figures matching consensus expectations.

Gasoline prices were the largest contributor to the monthly increase in prices, and mortgage interest costs are still adding notably to inflation even as interest rates have started to come down.

While air transport and travel tours saw a seasonal jump in price, the increase this year was weaker than in 2023 and as a result prices were lower on a year-over-year basis. Core measures of inflation were fairly subdued in July, with excluding food/energy prices up only 0.2% on a SA basis (even with mortgage interest costs still advancing) and CPI-trim and CPI-median both advancing by a slight 0.1% m/m, stated the bank.

With inflationary pressures fading away but concerns about the weakening labor market growing, CIBC continues to forecast three further 25bps cuts by the Bank of Canada (BoC) at the remaining policy meetings this year.