Canada Inflation Rate Rises to 1.4%, Below Forecasts

Consumer prices in Canada increased 1.4 percent year-on-year in August of 2017, following a 1.2 percent rise in July and below market expectations of 1.5 percent. It is the highest inflation rate in four months, mainly due to rising gasoline and homeowners' replacement costs.

Transportation costs rose 2.8 percent on a year-over-year basis in August, following a 1.9 percent increase the previous month. As in July, gasoline prices contributed the most to the gain in transportation prices and to their acceleration. The gasoline index rose 8.6 percent, following a 4.6 percent increase in July. Air transportation costs grew at a greater rate on a year-over-year basis in August than in July. In contrast, the rail, highway bus and other inter-city transportation index rose less.

The shelter index increased 1.3 percent year over year in August, matching the gain in July. Homeowners' replacement costs contributed the most to the increase in prices, rising 4.2 percent. Prices for natural gas (+8.6 percent) increased at a slower year-over-year rate in August than in July. The electricity index was down 8.9 percent, partly reflecting provincially legislated price reductions in Ontario earlier in 2017.

Consumer prices for food rose 0.9 percent after increasing 0.6 percent. Prices for food purchased from stores grew 0.3 percent, following a 0.1 percent decline in July. Meat (+1.1 percent) and fresh fruit (+5.6 percent) prices grew at greater rates in August than in July. Prices for food purchased from restaurants rose 2.6 percent in August, matching the year-over-year gain in July.

In August, the household operations, furnishings and equipment index (-0.2 percent) was down for the second consecutive month. The furniture index contributed the most to this decline, down 2.7 percent. Prices for household appliances declined 3 percent year over year in August, following a 2 percent decrease in July. Meanwhile, the tools and other household equipment index (+0.9 percent) rose less.

On a monthly basis, consumer prices edged up 0.1 percent after being flat in July.  

The core index rose 0.9 percent on the year, the same as in each of the previous three months and remaining the lowest annual core inflation since February of 2011.

Statistics Canada | Joana Taborda |
9/22/2017 12:41:36 PM