© Reuters. People shop at a grocery store in Toronto, Ontario, Canada November 22, 2022. REUTERS/Carlos Osorio/File Photo
OTTAWA (Reuters) – Canada’s annual inflation rate in August jumped to 4.0% from 3.3% in July on higher gasoline prices, while two of the three core inflation measures also rose, Statistics Canada said on Tuesday.
Analysts polled by Reuters had forecast inflation would hit 3.8%. Month-over-month, the consumer price index rose 0.4% compared to a predicted 0.3% gain.
The August rate, the highest since the 4.4% in April, is well above the Bank of Canada’s 2% target. The main driver was a 0.8% year-on-year increase in gasoline prices, which had dropped 12.9% in the 12 months to July.
Two of the Bank of Canada’s three core measures of underlying inflation also posted gains. CPI-median edged up to 4.1% from 3.9% in July while CPI-trim rose to 3.9% from 3.6%.
Shelter prices in August increased by 6.0% after a 5.1% advance in July, pushed up in part by rising rents and higher interest rates.
Bank of Canada Governor Tiff Macklem, noting an increase on oil prices, predicted on Sept 7 that “headline inflation is going to go up in the near term before it eases”.
The central bank held its key overnight interest rate at 5% on Sept 6, noting the economy had entered a period of weaker growth, but said it could raise borrowing costs again should inflationary pressures persist.