Annual inflation rate jumped to 3.0% in July, highest reading since 2011

20 August, 2018, 02:30 | Author: Eric Barnett
  • Signage mark the Statistics Canada offiices in Ottawa

Canada's annual inflation rate got up to 3% on a year-over-year basis.

Earlier in the summer, the Bank of Canada said that the inflation rate would jump to about 2.5 percent before it settles back down to two percent in late 2019.

He adds that the Bank of Canada could also move to increase the interest rate in the fall in response to the strong inflation report and that would mean higher borrowing costs.

Canada's annual inflation rate rose 3 per cent in July versus 2.5 per cent the previous month as energy prices climbed.

Some of the gains in prices in July (food prices, for example) may prove temporary, said Andrew Grantham, senior economist at CIBC Capital Markets, in Friday commentary.

"We continue to lean toward an October rate hike rather than September".


Economically speaking, consumer sentiment for August is scheduled to come out, along with leading economic indicators and the Advance Quarterly Services Report that measures the performance of the USA service economy, for the second quarter.

The average of Canada's three measures of core inflation, which leave out more-volatile data like pump prices and are closely watched by the central bank, rose last month to 2.0 per cent compared with 1.96 per cent in June.

"If we're getting a little more pleasant talk or pleasant surprises in terms of cooler heads coming to the table to discuss the trade positions a little more rationally, I think that's certainly a positive thing and the markets should take it as such".

The report says that a 25.4 percent increase in the price of gasoline and a 28.2 percent increase in the cost of air transportation compared with a year ago helped push overall prices higher. The central bank raised its trend-setting interest rate to 1.5% earlier this summer.

With files from the Canadian Press.

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