Canada’s inflation rate continues to pick up its pace, reaches 1.4% in August

OTTAWA — The country’s annual inflation rate continued to accelerate last month with a boost from higher costs for gasoline, hotels and airline tickets.

The new inflation reading Friday of 1.4 per cent brought the data point closer to the Bank of Canada’s ideal target of two per cent and supported the bank’s predictions that recent softness was mostly temporary.

The inflation number crept up from 1.2 per cent in July and a two-year low of just one per cent in June, Statistics Canada said.

Motivated by powerful economic growth in the first half of 2017, the inflation-targeting bank has raised its benchmark interest rate twice since July and many analysts expect it to continue along its hiking path over the next year.

The report Friday also showed two of the central bank’s three preferred measures of underlying inflation, that seek to look through the noise of more-volatile items like gasoline, also increased in August.

But while many economists predicted the inflation numbers were unlikely to change the Bank of Canada’s thinking when it comes to its next rate hike, some thought the latest retail-trade data, also released Friday, could encourage the bank to hold off a little longer.

Statistics Canada said Friday that retail trade in July rose 0.4 per cent compared with the previous month.

Bank of Montreal senior economist Sal Guatieri said the retail sales data suggests the economy is starting to show signs of slowing after its torrid pace in the first half of 2017.

“If anything, (the figures) reinforce our view that the bank will take a more-patient approach to raising interest rates going forward after raising rates twice in two months,” said Guatieri, who’s predicting the next hike in January.

He doubts the consumer, which has been a main driver of Canadian growth, will be able to keep up its spending pace as interest rates and debt loads rise.

Some economists, however, believe the central bank could raise rates again next month, especially as trends point to a gradual rise in inflation.

“While volume retail sales were slow in July, this fits the Bank of Canada’s narrative of a moderating domestic economy in the second half of the year,” Desjardins senior economist Jimmy Jean wrote in a research note to clients.

“So long as growth cools but remains above potential, the Bank of Canada still has arguments to remove more of the ‘considerable’ accommodation in place.”

In the inflation report Friday, the upward forces were led by year-over-year price increases last month of 8.6 per cent at the gas pump, 6.3 per cent for traveller accommodation and 6.2 per cent for air transportation.

Consumer prices rose at a faster pace in nine of the 10 provinces in August, while the pace of inflation held steady in Manitoba, the federal statistical agency said.

The pace of inflation in Saskatchewan saw the biggest acceleration of any province — climbing to 1.7 per cent in August from 0.8 in July — in large part due to the application of the provincial sales tax in new areas. Higher prices in Prince Edward Island last month were partly linked to sales tax increases.

The biggest contributors to the downward pressures were cheaper year-over-year prices for electricity, computers and digital devices as well as household appliances.

Just Posted

Women raising alarm about BBQ brushes

Beverly Smith’s ended up in an operating room after wire bristle pierced her bowel

Ban barbecue brushes: doctor

Brushes pose a health risk because wire bristles can get ingested

Live play and creche display in Red Deer open to the public

Church hosting live nativity, creche display A mainstay of some Red Deerians’… Continue reading

WATCH: Red Deer Royals nearing 50 years

The Red Deer Royals are a second family to Elise Bluett. The… Continue reading

Expect cooler temperatures and ‘dusting of snow’ this Christmas

Red Deer recorded a high temperature on Tuesday

Bed shortage means no mental reviews done yet on accused Edmonton attacker

A man accused of attempted murder after a police officer was hit… Continue reading

Update: Police release photo of suspected vehicle involved in fatal

Motorist dies near Ponoka after loose tire collides with vehicle near Ponoka

Notley criticizes MLA who fired staffer after sex harassment complaint

Notley says if Jason Nixon was her house leader he’d be out of a job immediately.

Red Deer needs to find a solution to syringe debris: city manager

City will consider the problem during the 2018 operating budget talks

WestJet Christmas video turns children’s wishes into reality

This year’s annual video took a new spin on the 12 days of Christmas

VIDEO: Replay Red Deer Dec. 10

Watch news highlights from Red Deer and Central Alberta

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month