Make Kitco Your Homepage

Canada inflation rate jumps to 4.0% in Aug on higher gas prices

Kitco News

OTTAWA, Sept 19 (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.

Reporting by David Ljunggren, editing by Dale Smith

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.