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Broadening Inflation Pressures Raise Likelihood of Rate Hike
Headline inflation holds steady despite firmer energy costs. Canada’s Consumer Price Index rose 0.2 per cent monthly in August, leaving the annual inflation rate unchanged at 3 per cent. Higher gasoline prices accounted for roughly one-quarter of the monthly rise, with a larger contribution likely in September after the recent surge in oil prices. Food inflation remained subdued, rising just 0.1 per cent as the effects of earlier drought conditions continued to ease. However, price pressures strengthened across several core categories, including shelter, recreation, and communications, while clothing and footwear provided the only notable offset. This composition suggests that inflation is broadening even before the full impact of higher energy prices is reflected in the headline reading.