A gas pump is shown at a filling station in Montreal on April 12, 2017. The federal carbon tax is designed to lower the country's carbon emissions so Canada can meet the reduction targets it agreed to at the Paris climate summit. (Graham Hughes/THE CANADIAN PRESS)

Inflation eases in August thanks to slower rise in gas prices

Canada’s annual inflation rate eased to 2.8 per cent in August largely driven by slower rise in gasoline prices, Statistics Canada reported Friday.

The data agency reported that prices were up in all eight major components. The transportation index rose at a slower pace in August (+7.2 per cent) than in July (+8.1 per cent), but remained the largest contributor to the year-over-year increase in consumer prices, Statistics Canada said.

Year-over-year pump prices rose 19.9 per cent in August, compared with a 25.4 per cent increase in July. Excluding gas prices, the inflation rate was 2.2 per cent last month.

Prices for durable goods rose 1.1 per cent year over year, following a 0.8-per-cent increase in July.

Consumer prices increase in all major components, 12-month % change
July 2018 August 2018
All-items Consumer Price Index 3.0 2.8
Food 1.4 1.6
Shelter 2.4 2.3
Household operations, furnishings and equipment 0.7 0.8
Clothing and footwear 0.5 0.5
Transportation 8.1 7.2
Health and personal care 1.1 1.4
Recreation, education and reading 1.8 1.9
Alcoholic beverages and tobacco products 4.5 4.6
Source: Statistics Canada 

Price growth for non-durable goods and services also eased somewhat (+3.8 per cent and +3.1 per cent respectively) but remained robust despite a light monthly deceleration.

“While the headline inflation has eased off somewhat, the Bank of Canada core measures continued to move forward,” TD economist Ksenia Bushmeneva wrote in a note to clients.

“Continued progress on the inflation front alongside a well-performing economy and a range of indicators pointing to limited excess capacity suggest that maintaining stable inflation will require further rate hikes by the central bank, with another one likely coming next month.”

Categories: Economy
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