Canada’s annual inflation rate slowed to 2 per cent in August, reaching the Bank of Canada’s target rate and marking the slowest pace since February 2021. Analysts polled by Reuters had expected the Consumer Price Index (CPI) to cool to 2.1 per cent from 2.5 per cent in July.
The Bank of Canada’s closely-watched measures of core inflation (CPI-median and CPI-trim) also eased in August. CPI-median fell from 2.4 per cent in July to 2.3 per cent in August, while CPI-trim dropped from 2.7 per cent in July to 2.4 per cent.
On a monthly basis, CPI fell 0.2 per cent in August. Seasonally adjusted, CPI was 0.1 per cent higher than July.
Statistics Canada said on Tuesday that gasoline helped pull back inflation, due to a combination of lower prices and base-year effects. Mortgage interest costs and rent were the top contributors to August’s increase. Mortgage interest costs have been the largest contributor to headline inflation in Canada since December 2022.
“Even though much of the easing relative to July was due to lower gasoline prices, there was good news within core measures as well,” CIBC economist Andrew Grantham wrote in research note on Tuesday.
“The bottom line then is that inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate.”
More to come.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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