Canada’s annual inflation rate reached 4.1 percent in August, the fastest pace since March 2003, Statistics Canada said on Wednesday. This was up from 3.7 per cent in July.
The agency said the rise in the Consumer Price Index (CPI) is a result of both price pressures and a comparison with lower price levels in 2020.
Gasoline and housing prices were higher due to higher increases compared to the same month a year ago.
Excluding gasoline prices, which rose 32.5 percent year-on-year in August, Statistics Canada says the annual inflation figure would have been 3.2 percent last month.
The statistics agency also says that homeowner replacement costs, which relate to the price of new homes, rose at an annual rate of 14.3 percent in August.
The pace of housing prices was the fastest annual increase since September 1987 and marked the fourth consecutive month of double-digit price growth.
Also the increase in prices in August was a rise in meat prices, which rose 6.9 percent year-on-year, the fastest pace since June 2020, which Statistics Canada says is due to increased demand from restaurants.
The Consumer Price Index has been trending upwards since the start of the year, and has recorded above the Bank of Canada’s target range of one to three percent since April.
Governor Tiff McCalem has vowed that the central bank will step in if price pressure persists, but for now the Bank of Canada sees the current issues as tentative.
Statistics Canada said the average of the three measures for core inflation, which is considered a better gauge of underlying price pressures and is closely tracked by the Bank of Canada, was 2.57 percent for August, up from 2.43 percent in July. The August readings are the highest since March 2009.
Royce Mendes, senior economist at CIBC, says the Bank of Canada will likely continue to watch the current data as the pressure still doesn’t look sustainable.
He writes in a note to investors that the annual inflation rate is likely to fall partly with the change in seasons as the fourth wave of COVID-19 is creating a headwind for the services sector.
– With files from Granthshala News reporter Erica Alini