The inflation rate in Canada slowed on an annual basis to 7.6 percent in July, with the slowdown largely driven by a decrease in fuel prices.

The inflation rate reached a 40-year high of 8.1 percent in June, but economists had widely expected inflation to slow since then.

In the latest Consumer Price Index report, Statistics Canada said that the price increase in July was the smallest monthly gain since December 2021.

Data released today Tuesday by Statistics Canada showed the continuation of the slowdown in the pace of growth of the inflation index for the second consecutive month by the end of last July, as the Consumer Price Index rose by 0.1% during last July, in line with market expectations, but lower than the previous reading of the Canadian inflation index which had recorded a growth of 0.7% during last June.

On the other hand, data from Statistics Canada showed that the annual general Canadian inflation recorded strong growth of 5.5% while it was expected to record growth of about 4.7% only. The previous reading showed growth of 4.6% in June.

The Canadian inflation index measures the average prices of a basket of consumer goods and services such as transportation, food, and medical care, and it is determined by calculating the average price of each item in the pre-defined basket.

Also, the Consumer Price Index is considered one of the most important indicators of inflation, and therefore it affects currency valuation. Rising prices push central banks to raise interest rates in order to tackle inflation.