Canada: Inflation accelerates on higher gasoline prices
September 21, 2011
In August, consumer prices increased a seasonally adjusted 0.3% over the previous month, which was above the 0.1% monthly price rise in July. Simultaneously, annual headline inflation quickened from 2.7% in July to 3.1% in August, exceeding market expectations of a 2.9% increase and surpassing the upper ceiling of the Central Bank's 2.0% 1% inflation target. The higher headline inflation print reflected a faster increase in fuel prices. Energy prices accelerated from a 12.9% year-on-year increase in July to 13.4% in August. However, inflation excluding energy costs also increased, reaching 2.0% in August (July: 1.7%). Annual core inflation, which excludes volatile items such as gasoline and fresh food, increased from 1.6% in July to 1.9% in August. The Bank of Canada expects headline inflation to average 2.9% in 2011 and 2.1% in 2012.