Canada's inflation rate edges up to 1.9%
Consumer price increase still 'tame'
Canada's annual inflation rate rose to 1.9 per cent in September on higher energy and car prices, Statistics Canada said Friday.
That was a jump of two-tenths of a percentage point from August's rate and was the highest inflation rate since January.
Annual inflation rates by province | ||
|---|---|---|
| Province | September 2010 | August 2010 |
| Newfoundland and Labrador | 2.3% | 2.4% |
| P.E.I. | 0.8% | 1.2% |
| Nova Scotia | 1.8% | 1.7% |
| New Brunswick | 1.6% | 1.7% |
| Quebec | 1.0% | 0.6% |
| Ontario | 2.9% | 2.9% |
| Manitoba | 0.5% | 0.3% |
| Saskatchewan | 1.2% | 0.8% |
| Alberta | 0.9% | 0.6% |
| British Columbia | 1.6% | 1.5% |
| Source: Statistics Canada | ||
Energy was 5.6 per cent more expensive than it was a year earlier. Shelter costs also rose on the heels of rent increases and higher natural gas and electricity prices.
Car prices jumped five per cent in the last year. "Vehicle manufacturers continued to offer incentives to consumers, but to a lesser extent than they did at the same period a year earlier," Statistics Canada said.
The cost of gasoline and car insurance premiums each rose by 3.1 per cent.
Seven of the eight major components of the consumer price index (CPI) were up over last year's levels. Only clothing and footwear costs were cheaper.
Food prices were up 2.1 per cent year-over-year last month, compared with a 1.6 per cent rise in August. Statistics Canada blamed higher restaurant prices and said prices also rose for meat, sugar, vegetables and dairy products.
Prices rose in every province compared with last year, led by Ontario's 2.9 per cent rate.
Core rate eases
The core inflation rate — which excludes the most volatile parts of the CPI — eased from 1.6 per cent annually to 1.5 per cent.
Some analysts expect the core rate to continue to drop because of excess slack in the economy and slower growth. TD expects core inflation to fall to 1.3 per cent by the first quarter of next year — well below the Bank of Canada's two per cent target.
"In turn, this should leave the Bank of Canada comfortably on the sideline until the spring of next year," said TD economist Diana Petramala.
On a seasonally adjusted basis, core prices rose a tenth of a percentage point from August to September.
For the third quarter as a whole, core inflation was 1.6 per cent. The Bank of Canada expects no change in that rate in the fourth quarter.
Overall inflation in September was largely in line with economists' expectations. The Canadian dollar edged down 0.04 cents to 97.40 cents US by 1:30 p.m. ET.
Analysts said this inflation report supports the view that further increases in interest rates are at least several months away.
"Inflation remains tame in Canada, which will allow the Bank of Canada to stay on hold well into 2011," said BMO Capital Markets economist Robert Kavcic in a morning commentary.