Canada's inflation rate rose to 3.0 per cent in July, and the measure without gasoline in it did not move at all. Shelter costs rose 1.3 per cent. Nothing changes on a variable rate mortgage until the Bank of Canada meets on 2 September.
Statistics Canada reported on 17 August that the Consumer Price Index rose 3.0 per cent year over year in July, up from 2.8 per cent in June. Three per cent sits at the top of the Bank of Canada's control range, and a number like that usually arrives with a warning attached about rate cuts coming off the table.
The detail underneath it says something quieter.
Why did inflation rise when shelter costs did not?
The all items index excluding gasoline rose 2.2 per cent in July, the third month in a row at that level. Shelter, which is the largest single line in the basket for most households, rose 1.3 per cent. The headline moved and the measure without energy in it did not, which points at gasoline rather than at a broad increase in what people pay for everything else. You can read the release yourself in Statistics Canada's Daily.
Prices did still rise 0.5 per cent between June and July, and 0.3 per cent once seasonal patterns are taken out, so this was not a month where nothing happened. It was a month where one component did most of the work.
Does this change anything on a variable rate mortgage today?
No. A variable rate moves with your lender's prime rate, and prime moves when the Bank of Canada changes its policy rate. The Bank held that rate at 2.25 per cent on 15 July and has not met since.
The next scheduled announcement is 2 September at 9:45 in the morning. Nothing about your payment changes because of an inflation reading between now and then.
What if you are renewing in the next few months?
Fixed rates are the thing to watch, and they do not follow the policy rate. They follow Government of Canada bond yields, which move every day on what traders expect the Bank to do next rather than on what it has already done. That is why a fixed rate can move in the week after an inflation report even though the Bank has not met.
Two things are worth doing, and neither requires a decision today. Ask your current lender for a written rate hold, which is commonly offered for 90 to 120 days and costs nothing. Then get a second quote, because a hold from your own lender is a floor to negotiate from rather than an offer to accept.
If you want to see what a given rate does to what you can carry, our affordability calculator uses the same debt service ratios and stress test a lender applies.
What does it mean if you are buying?
Less than the headline suggests, and the national numbers say why.
The Canadian Real Estate Association reported on 18 August that home sales rose 0.5 per cent from June to July, while new listings fell 1.6 per cent. The MLS Home Price Index was up 0.1 per cent on the month and down 3.3 per cent from a year ago. There were 4.7 months of inventory at the end of July, and the sales to new listings ratio was 51.3 per cent, which is close to the long term average and describes a balanced market rather than a tilted one. CREA's own summary called it a carbon copy of June. The full release is on CREA's statistics site.
A balanced market is the one where preparation matters most, because nothing is being decided for you by speed. Financing lined up in advance, a clear view of closing costs and a willingness to walk away are worth more now than they were in 2021.
What we are watching
The Bank of Canada announcement on 2 September, and whether July's reading changes the tone of it. The August inflation figure, due from Statistics Canada in mid September, which will show whether 3.0 per cent was an energy blip or the start of something. And new listings through September, which in the Greater Toronto Area is the month that usually sets how the autumn goes.
If you are weighing a decision that turns on any of this, ask us. We would rather talk it through than watch somebody act on a headline.