Canada’s inflation rate increases to 4%



Canada’s inflation rate jumped higher last month, to an annual pace of four per cent, mostly because of an increase in gasoline prices.

Statistics Canada reported Tuesday that the inflation rate ticked higher by 0.7 percentage points, in large part because gasoline prices increased on an annual basis for the first time since January.

Pump prices increased by 4.6 per cent in August alone, and are up by 0.8 per cent compared to where they were a year ago.

Outside of gasoline, prices for other essentials like food and shelter continued to increase.

The cost of keeping a roof over your head increased by six per cent in the year up to August, an uptick from 5.1 per cent in July. Within that, rent was a major factor, with average rents increasing by 6.5 per cent across the country.

But it didn’t get any cheaper to own, either. Mortgage interest costs rose by another 2.7 per cent during the month, and are now clocking in at a 30.9 per cent increase in the year up to August. That’s up from July’s already eye-watering level of 30.6 per cent.

There was one source of comparable relief however, from an unexpected place: the grocery aisle.

The price of food purchased from stores increased by 6.9 per cent in the past year. While that’s still almost twice the overall inflation rate, it’s down from recent highs of more than 11 per cent. It’s also the slowest annual increase to the typical grocery bill since January of 2022.

In August specifically, the price of food actually declined by 0.4 per cent from July’s level.

Doug Porter, an economist with the Bank of Montreal, says while the increase in the overall inflation rate wasn’t unexpected, it’s nonetheless bad news for the Bank of Canada — which recently paused its campaign of rate hikes after an aggressive run to ratchet them up to five per cent.

“Things just got a lot more interesting for the Bank of Canada, and most definitely not in a good way,” he said.

Trading in investments known as swaps, which bet on central bank moves, imply there’s now a 50 per cent chance of a rate hike when the central bank meets at the end of October.

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