Canada Inflation August 2016


Inflation decelerates in August

In August, seasonally-adjusted consumer prices recorded a 0.1% decrease over the previous month, which was down from the flat figure recorded in July and marked the lowest reading in six months. According to Statistics Canada, lower prices for recreation, education and reading were the main drivers that contributed to this month’s decline. However, prices in five of the eight major components that compose the index increased over the previous month.

Inflation fell to 1.1% in August from 1.3% in July. August’s result was below market expectations of a 1.4% rise and remains within the Bank of Canada’s target range of 2.0% plus/minus 1.0 percentage point. Annual average inflation in August matched July’s 1.4%—the highest reading since August 2015. Core inflation, which excludes volatile items such as gasoline and fresh food, decreased from 2.1% in July to 1.8% in August.

The Bank of Canada expects headline inflation to end 2016 at 1.8%, according to its July Monetary Policy Report. For 2017, the Bank expects inflation to close the year at 2.1%. FocusEconomics Consensus Forecast panelists expect inflation to average 1.6% in 2016, which is unchanged from the previous month’s forecast. The panel expects inflation to increase and average 2.0% in 2017.

Author:, Economist

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Canada Inflation Chart

Canada Inflation August 2016

Note: Year-on-year and month-on-month variation of seasonally adjusted consumer price index in %.
Source: Statistics Canada (SC).

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