The annual inflation rate of Canada increased to 1.9 percent in August, said Statistics Canada on Tuesday, the last piece of economic data that will be published before the next decision of the interest rate of the Bank of Canada.
The highest rate was largely expected. Gasoline prices, which fell at a rate of more than 16 percent in July, still decreased in August, but at a slower pace than before, contributing to the ascending tick in the general inflation rate.
Pump prices have been in a downward trend since the elimination of consumer carbon price in April. With the gas stripped of the general inflation rate, the numbers were reduced mainly in August.
Economists anticipate that the Central Bank will reduce rates by 25 basic points during its meeting on Wednesday, which would mark the first cut of the bank since March.
“This report was mainly a low drama,” Douglas Porter, BMO chief economist, wrote in a note for customers.
The rhythm of prices growth “will not cause much stress to the Bank of Canada, so keep them on the way for a tariff cut in the decision tomorrow,” Porter wrote.
Early inflation increases 3.5 percent
The groceries increased 3.5 percent in August compared to the same period last year, according to Statistics Canada data. The price of meat increased by 7.2 percent, with beef and fresh and frozen processed meat more expensive that contribute to greater inflation.
Fresh fruit prices fell 1.1 percent year after year, mainly driven by the decrease in prices for grapes and berries, the data agency said.
The cost of cell services decreased at a slower pace in August compared to the previous year, but increased monthly as companies increased the prices of cell phone plans return to school. That was compensated a bit for lower prices for smartphones and tablets.
And the prices of travel services fell last month by 3.8 percent, partly due to the lower demand of trips to the US. The last province organized the Canada Games during the last half of the month.
