Canada's July consumer price index is expected to show a modest annual acceleration in headline inflation to 2.9% from 2.8% in June, ahead of the latest round of US tariffs taking effect on Wednesday, according to RBC Economics in a note.
The CPI pickup is expected to be driven primarily by a rebound in energy prices, said RBC in a Friday note.
While oil prices remained below their April and May peaks, they rose in July as the ongoing Middle East conflict disrupted transportation through the Strait of Hormuz, added RBC. Average gasoline prices were around 25% higher annually in July, up from a 20% increase in June.
Statistics Canada is slated to release July CPI at 8:30 a.m. ET on Monday.
The pass-through from higher energy costs to broader consumer prices is expected to remain limited, wrote RBC Assistant Chief Economist Nathan Janzen and Senior Economist Claire Fan in the note.
While airfare inflation remains elevated, underlying price pressures have stayed close to the Bank of Canada's 2% target, they added. Prices excluding food and energy are expected to rise to 1.9% year over year from 1.8% in June, while the BoC's preferred median and trimmed-mean measures are likely to remain broadly stable.
Food-price inflation is forecast to moderate slightly but remain above 3% annually.