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Why prices are rising again (and why it's mostly one thing)

Inflation is back at 3%. Almost all of it is gasoline.

That single sentence explains most of what you've felt at the pump this summer, and it also explains why the rest of your budget looks calmer than the headline suggests. Two inflation numbers can both be true at once. One measures what's happening at the gas station. The other measures whether price pressure has spread through the rest of the economy. Right now the first is loud and the second is quiet.

The number, and the number behind it

 

Canada's July inflation rate hit 3.0%, up from 2.8% in June. But take gasoline out and it's 2.2% , the third consecutive month at that level. The Bank of Canada's preferred core measures sit at 1.9% and 2.0%, essentially at target.

Gasoline is up 25.7% from a year ago, accelerating from 20.5% in June. The cause isn't domestic. It's the ongoing conflict disrupting the Strait of Hormuz, the shipping chokepoint that carries roughly a fifth of the world's oil supply. Transportation costs overall rose 7.8%.

Groceries rose 3.1% , and actually cooled from 3.9% in June. This is worth sitting with if food is where you feel inflation most. Grocery prices have now outpaced the headline rate for 18 straight months, so the frustration is earned. It's just no longer the thing getting worse.

The Bank of Canada held its policy rate at 2.25% on September 2. Its stated concern wasn't today's pump price but something further down the line: the longer high oil prices and elevated refinery margins persist, the greater the risk that those costs reach the shelf.

Dollar-for-dollar: Canada's $27.6B counter-tariffs

 

The second pressure on prices arrived this month.

On September 8, Canada imposed counter-tariffs on roughly $27.6 billion of American imports , steel, dairy, appliances, farm equipment, electronics , at rates of 15%, 25% and 50%, matched dollar-for-dollar to Washington's own.

That answered the U.S. move on August 22, which lifted tariffs on a broad range of Canadian goods from 35% to 50%. Talks have collapsed, and the U.S. Trade Representative says none are scheduled.

Goods that comply with CUSMA remain largely exempt, which is why economists put the affected share of trade at only about 5–6% and describe the likely price impact as real but contained. Further U.S. restrictions on Canadian dairy, motorcycles and alcohol take effect September 29.

A lesson from Hadith

حَدَّثَنَا مُحَمَّدُ بْنُ عُثْمَانَ الدِّمَشْقِيُّ، أَنَّ سُلَيْمَانَ بْنَ بِلاَلٍ، حَدَّثَهُمْ حَدَّثَنِي الْعَلاَءُ بْنُ عَبْدِ الرَّحْمَنِ، عَنْ أَبِيهِ، عَنْ أَبِي هُرَيْرَةَ، أَنَّ رَجُلاً، جَاءَ فَقَالَ يَا رَسُولَ اللَّهِ سَعِّرْ ‏.‏ فَقَالَ ‏"‏ بَلْ أَدْعُو ‏"‏ ‏.‏ ثُمَّ جَاءَهُ رَجُلٌ فَقَالَ يَا رَسُولَ اللَّهِ سَعِّرْ فَقَالَ ‏"‏ بَلِ اللَّهُ يَخْفِضُ وَيَرْفَعُ وَإِنِّي لأَرْجُو أَنْ أَلْقَى اللَّهَ وَلَيْسَ لأَحَدٍ عِنْدِي مَظْلَمَةٌ ‏"‏ ‏.‏

 

Narrated Abu Hurayrah:

 

A man came and said: Messenger of Allah, fix prices. He said: (No), but I shall pray. Again the man came and said: Messenger of Allah, fix prices. He said: It is but Allah Who makes the prices low and high. I hope that when I meet Allah, none of you has any claim on me for doing wrong regarding blood or property.

Reference: Sunan Abi Dawud 3450

Fourteen centuries ago, in a market far smaller than ours, people brought the Prophet ﷺ the same complaint we bring to our central banks. Prices had moved. Fix them. He declined , not out of indifference, but because he was asked to control something that wasn't his to control.

 

Tying it all Together

 

The number on the page says 3%. But the pain isn't coming from a decision anyone made in Ottawa. It's coming from a waterway eleven thousand kilometres away that carries a fifth of the world's oil, and from a trade fight that started in a room none of us were in. The Bank of Canada held its rate at 2.25% not because it stopped caring, but because there are pressures no interest rate can reach.

There's a strange mercy in knowing that. It means the frustration you feel at the pump isn't a sign that you've mismanaged something. Some of what moves your grocery bill was never yours to move. What is yours is what you do inside those constraints , and that has always been the part Allah asks about.

 

Tawakkul is not standing still

 

It's worth being precise about what trust in Allah actually asks of us here, because it is easy to mistake acceptance for passivity. The Prophet ﷺ was asked whether a man should tie his camel or rely on Allah, and the answer was: tie it, and rely on Allah. Ibn Rajab's reading is the one worth carrying, a person works through permissible means, and then places his trust in Allah. Reliance doesn't cancel effort. It gives effort its proper size.

So here is the smaller, more useful question: inside constraints we didn't choose, what is actually still ours?

 

Aim at what's moving, not what's loudest. If you have any flexibility in how you move , combining errands into one trip, carpooling to work or jumu'ah, one transit day a week , that's where the real money is this year. It's less emotionally satisfying than scrutinizing the grocery bill, and considerably more effective.

 

Cut waste before you cut quality. Most Canadian households throw out a meaningful share of the food they buy, which means some of the grocery inflation people feel is inflation on food that never got eaten. Meal planning, a shopping list, using what's already in the fridge, this is the one lever that costs nothing and doesn't require eating worse.

 

Delay the tariffed purchase, not the necessary one. Appliances, electronics and farm equipment now carry counter-tariffs of 15% to 50%. If a purchase in those categories is discretionary and can wait, waiting is worth real money. 

 

Don't borrow your way through a supply shock. This is the one that matters most, and it's where the prohibition on riba turns out to be straightforwardly protective. Inflation squeezes cash flow, and the instinct is to bridge the gap with credit. But a temporary price shock financed at credit-card interest becomes a permanent loss, the shock passes, the compounding doesn't. Borrowing to cover a gas bill is how a hard year becomes a hard decade.

 

Give anyway. This will read as the least practical thing on the list, and it isn't. "Charity does not decrease wealth" is a claim about something the CPI doesn't measure. Households that keep giving through a tight year tend to keep perspective on what the tight year actually is: a squeeze, not a collapse.

 

None of this moves the price of oil. That was never the offer. The offer is that between a waterway you can't influence and a trade dispute you weren't consulted on, there remains a set of decisions that are entirely yours, and those are the ones you'll be asked about.

 

This article is for informational purposes only and does not constitute financial, religious, investment or tax advice.

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