Inflation accelerated in September to reach its highest level since February 2003, Statistics Canada said on Wednesday.
The consumer price index in September showed an increase of 4.4% compared to the same month last year, said the federal agency. By comparison, annual inflation stood at 4.1% in August.
Prices at the pump accounted for most of the increase, with consumers paying 32.8% more for gasoline last month than in September 2020. Excluding gasoline prices. gasoline, inflation would have stood at 3.5% in September, Statistics Canada said.
Overall, food prices rose 3.9% year over year, after rising 2.7% in August, the agency added.
The pace of overall price increases in August reflected the rebound in prices from a year earlier lows and increased consumer demand, in addition to reflecting supply chain bottlenecks, which have driven up transportation costs – which are ultimately passed on to buyers. These bottlenecks have not abated, and Bank of Canada Governor Tiff Macklem said last week that they are proving to be more persistent than initially anticipated.
Incomplete healing
The September inflation reading marked a sixth consecutive month in which consumer price increases exceeded the Bank of Canada’s target range of 1.0% to 3%.
According to Statistics Canada, the average of the three measures of core inflation, which are considered to be better indicators of underlying price pressures and are closely monitored by the Bank of Canada, was 2.7% in September, against 2.6% in August. The September reading is the highest since December 2008.
CIBC economist Royce Mendes said central bank inflation indicators suggested the economy is not yet fully healed from the pandemic. This data is unlikely to change the opinion of the Bank of Canada, which sees the recent rise in prices as temporary, he continued.
Governor Macklem recently indicated that the central bank would act to curb inflation if the rise in prices showed signs of being motivated by more serious factors than one-off pressure points.