Recent geopolitical tensions in the Middle East have sustained elevated oil and gasoline prices, lifting Canada’s headline CPI to 3.0% year-over-year in August 2026 and anchoring trader expectations for the 2026 annual average in the 3.0–3.9% range. Bank of Canada projections point to moderation toward 2.5% in the second half as gasoline margins narrow, with core measures already near the 2% target and limited broad-based pass-through evident so far. Analyst forecasts cluster around 2.7%, but outcomes hinge on whether energy cost pressures persist or ease alongside softer shelter and services inflation. The closely matched leading bins reflect uncertainty over oil-price volatility versus contained underlying dynamics, with September data and BoC communications as near-term catalysts.