Canada Inflation Rate at 5-Month Low of 1.9%

The annual inflation rate in Canada edged down to 1.9 percent in August 2019 from 2.0 percent in the previous month and below market expectations of 2 percent. It was the lowest inflation rate since March, primarily due to lower gasoline prices.

Year-on-year, prices slowed mostly for transport (1.4 percent vs 1.5 percent in July), namely gasoline (-10.2 percent vs -6.9 percent) amid lower global oil prices; and food (3.6 percent vs 3.8 percent), driven by fresh vegetables, fresh fruit and meat. Also, cost increased less for recreation, education and reading (2.0 percent vs 2.7 percent); health and personal care (0.9 percent vs 1.5 percent) and alcoholic beverages, tobacco and recreational cannabis (0.9 percent vs 1.2 percent). In contrast, inflation edged higher for shelter (2.4 percent vs 2.3 percent); household operations, furnishings and equipment (0.5 percent vs 0.3 percent). Meantime, prices advanced at the same pace for clothing & footwear (1.1 percent).

Regarding special aggregates of the CPI, cost of goods slowed to 0.9 percent in August from 1.3 percent in July, namely durable (1.6 percent vs 1.9 percent) and non-durable goods (0.6 percent vs 1.3 percent); and cost of energy fell more deeply (-4.7 percent vs -3.2 percent). Conversely, cost of services increased at a faster pace (2.6 percent vs 2.4 percent).

On a monthly basis, consumer prices dropped 0.1 percent, after rising 0.5 percent in the previous month and compared with market expectations of a 0.2 percent decrease.

The BoC's annual core inflation, which excludes volatile items, eased to 1.9 percent in August from 2 percent in July, and below market consensus of 2.2 percent. It was the lowest rate in four months.

Canada Inflation Rate at 5-Month Low of 1.9%

Statistics Canada | Luisa Carvalho |
9/18/2019 1:20:26 PM