OTTAWA--Canadian inflation accelerated last month as prices at the pump again spiked higher.

The consumer-price index rose 0.5% in July, bringing the annual inflation rate to 3%, Statistics Canada said Monday.

Higher gasoline prices as hostilities in the Middle East flared up were the biggest driver of cost pressures, though households also paid more in travel costs, due to a tailwind from the soccer World Cup. Stripping out gas, annual inflation held at 2.2% for a third straight month.

Economists were expecting the consumer-price index to rise 0.4% for the month, for annual inflation of 2.9% after cooling to 2.8% in June.

Underlying measures of inflation picked up slightly for the month. Core prices excluding volatile food and energy costs increased by 1.9% from a year earlier after rising 1.8% in June. The trimmed mean and weighted median measures of underlying inflation preferred by the Bank of Canada averaged 1.95% annually compared with 1.9% a month earlier.

Near-term inflation expectations have shifted with fluctuations in gasoline prices amid Middle East tensions. The Bank of Canada has forecast inflation will ease to about 2.5% in the second half of the year and return to its 2% target by early 2027, though policymakers have warned of uncertainty around the outlook due to the war between the U.S. and Iran.

July's inflation report is the last reading before the central bank's next decision on interest rates Sept. 2.

Gas prices jumped 25.7% on a year earlier in July, faster than the 20.5% advance the prior month, as the blockade of the Strait of Hormuz and partial closure of Red Sea shipping routes buoyed global oil prices.

Prices for travel tours in Canada also rose at a faster pace, lifted by more expensive hotels and flights to U.S. cities hosting World Cup matches.

Canadians did see further cooling of pressures at grocery stores, with food prices rising by 3.1% following June's 3.9% advance. Still, July marked the 18th consecutive month that the increase in grocery prices has outpaced headline inflation.

After contracting modestly in the first quarter, Canada's economy has recovered in recent months as businesses have shown signs of adapting to U.S. trade policies and exports have resumed growing following the hit to demand with the Trump administration's tariffs.

The focus is on Washington this week as a Wednesday deadline approaches for new 50% tariffs targeting $20 billion of U.S.-bound exports from Canada, which would raise the average effective tariff rate on shipments from Canada.