Canadian Manufacturing

Inflation eases to 2.8 per cent as gas price growth slows

The Canadian Press

Canadian Manufacturing
Financing Regulation Risk & Compliance

The August result matched the expectations of economists, according to Thomson Reuters Eikon

OTTAWA – The country’s annual inflation rate eased to 2.8 per cent in August as still-rising gasoline prices advanced at a more-moderate pace, Statistics Canada said Friday.

The agency’s latest number came in just below the previous month’s three per cent reading, which had pushed inflation to the top end of the Bank of Canada’s target range with the fastest price growth in seven years.

The August result matched the expectations of economists, according to Thomson Reuters Eikon.

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.


The August reading stayed above the mid-point of the Bank of Canada’s target range of one to three per cent. The bank, however, has described the hotter readings in recent months as temporary and has predicted inflation to fall back towards two per cent in early 2019 once the effects of past increases in gas prices fade away.

To look through some of the noise, the central bank has remained focused on the movements of core inflation – and the latest Statistics Canada figures show the reading crept upwards once again in August.

The average of Canada’s three measures of core inflation, which leave out more-volatile items like gas prices, rose slightly to 2.1 per cent compared with two per cent in July and 1.96 in June.

The Bank of Canada pays close attention to core inflation ahead of its interest-rate decisions – and can raise its trend-setting rate as a way to keep inflation from rising too high.

A closer look at the headline inflation numbers shows that the prices of passenger vehicles rose 2.3 per cent in August, up from two per cent in July. Statistics Canada said this was mostly due to increased availability of following-year models compared with a year ago.

The prices of booze and tobacco were up 4.6 per cent last month, while food costs increased 1.6 per cent.

In a separate report Friday, Statistics Canada said retail trade expanded 0.3 per cent in July in large part because of sales boosts at food and beverage stores and gas stations.

The July increase, which brought sales to $50.9 billion, followed a June contraction of 0.1 per cent and a May expansion of 2.2 per cent.


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