Canada: Inflation remains stubbornly low in August
Consumer prices increased 0.07% from a month earlier on a seasonally-adjusted basis in August, contrasting the 0.07% decrease in July. According to Statistics Canada, higher prices for shelter and Alcoholic beverages, tobacco products and recreational cannabis drove the monthly increase in prices.
Inflation was steady at July’s 0.1% in August. The print missed market analysts’ expectations of a 0.4% reading, and was well below the Central Bank’s 1.0%–3.0% target range. Meanwhile, annual average inflation ticked down from 1.3% in July to 1.2% in August.
Commenting on August’s inflation reading, Benoit P. Durocher a senior economist at Desjardins, noted:
“The aftereffects of the lockdown and weaker demand in some sectors have not finished leaving their mark on inflation. There is therefore every indication that the total annual inflation rate will stay below the lower target (1%) for some months to come. This will prompt the Bank of Canada to keep monetary policy very accommodative.”