New reports on a number of the key components that feed into the Bank of Canada’s interest rate decisions are out this week. The one that will be getting the most attention is the inflation reading for July.

It is expected there will be a small up-tick in the Consumer Price Index – or headline inflation – from 2.8% to 2.9%. Analysts point to rising energy costs as the main reason for the increase. However, that rate does remain inside the Bank’s 1.0% to 3.0% target range.

Food price increases will also contribute, but they are expected to moderate as commodity prices decline and supply chains continue to improve.

Of course, the central bank will be paying closer attention to core inflation which has been frustratingly “sticky”. The increase in core inflation (which excludes volatile items like food and fuel) are expected to slow from 3.5% to 3.0%. Some of that decline is due to the big increase that hit in April no longer being part of the three-month rolling average.

Mortgage interest costs continue to account for a disproportionate amount of CPI growth (almost a third of total growth). But the BoC will likely look past that component since it is a direct result of higher interest rates.

The July home sales and housing starts are also due out this week.

The Bank of Canada’s next rate announcement is set for September 6.

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