Inflation rises again, to new 39-year high of 8.1%
CBC
Canada's inflation rate rose to 8.1 per cent last month, Statistics Canada says, the fastest annual increase in the cost of living in decades.
The data agency said gasoline was the biggest single contributor to the overall rate going up, as pump prices were up by 54.6 per cent compared to the same month a year ago.
If gasoline is stripped out, the inflation rate would be 6.5 per cent.
Another major source of inflation this year has been food prices, which rose by 8.8 per cent in the past year. That's the same pace of increase seen the previous month, but economist Tu Nguyen with HR consultancy RSM Canada says it's too soon to conclude that food prices may have peaked.
"Part of that can be attributed to the fact that Canada consumes more domestically grown food in the summer, which helps keep costs down," she said.
Although the 8.1 per cent figure is the fastest annual increase since 1983, economists had been expecting the rate to come in even higher, with a consensus of those polled by Bloomberg forecasting a rate of 8.4 per cent.
"Today's result is better, but not good," is how economist Doug Porter with Bank of Montreal described it. "It's really saying something when an 8.1 per cent inflation rate is greeted with a modicum of relief in financial markets because it wasn't quite as awful as expected."
Despite yet another multi-decade high in inflation, Wednesday's data will likely come as a small relief to the Bank of Canada, which has been undertaking an aggressive campaign of raising interest rates to rein in the runaway cost of living.
After raising its benchmark rate by the biggest amount in 20 years last week, the bank is forecast to keep raising lending rates, although perhaps not as aggressively as before.
"We expect the bank to continue hiking in September, albeit with a more moderate 50-point move at that time," Porter said.