Canada‘s annual inflation rate increased to 1.9% in August, up from 1.7% in July, as higher food costs were offset by sharply lower gasoline prices, Statistics Canada reported on Tuesday.
The economist consensus estimate was for a 2% increase.
Gas prices fell year over year due to the removal of the consumer carbon tax, but decreased at a smaller rate in August than in previous months.
The Consumer Price Index (CPI), excluding energy and food, rose 2.4% year over year, but was down from 2.5% in each of May, June and July.
A 4.5% increase in rents and 4.2% rise in mortgage interest costs were the main contributors to the year-over-year change in CPI for August.
August’s inflation reading reinforces the view of many economists that the Bank of Canada (BoC) will cut interest rates on Wednesday. The question remains, though, whether there will be even interest rate reductions in the near future.
The BoC held its policy rate during its three previous decisions, due in large part to what it said was evidence of underlying inflation.