Canada: Inflation comes in at highest level since February 2003 in September
Consumer prices increased a seasonally-adjusted 0.42% over the previous month in September, a smaller increase than August’s 0.49% increase. September’s result marked the weakest reading since June. Looking at the details of the release, prices for housing was largely steady in September. However, prices for transportation grew at a slower pace.
Inflation edged up to 4.4% in September, following August’s 4.1%. September’s result marked the highest inflation rate since February 2003. Annual average inflation rose to 2.4% in September (August: 2.1%). Finally, core inflation rose to 3.7% in September, from the previous month’s 3.5%.
Commenting on the inflation outlook, Royce Mendes, senior economist at CIBC World Markets, noted:
“This year’s inflation has now more than made up for last year’s weakness, with the level of prices now slightly higher than what would have been the case if the Bank of Canada had been able to generate stable 2% inflation during the pandemic. The headline rate of inflation is also likely to remain above 4% for longer than we had previously envisioned, particularly with the recent run up in commodity prices and disappointing news on supply chains. Still, the Bank of Canada will probably continue to view these as temporary increases, with sustainable price pressures not showing up until the economy is further healed.”