Canadian dollars fall in a photo illustration in Vancouver, Sept. 22, 2011. Statistics Canada says the consumer price index in September was 2.2% per cent compared with a year ago. THE CANADIAN PRESS/Jonathan Hayward

Annual pace of inflation slows to 2.2 per cent in September: Statistics Canada

Statistics Canada said Friday the consumer price index in September was up 2.2 per cent from a year ago compared with a year-over-year increase of 2.8 per cent in August

The annual pace of inflation slowed more than expected in September as increases in the price of gasoline continued to ease.

Statistics Canada said Friday the consumer price index in September was up 2.2 per cent from a year ago compared with a year-over-year increase of 2.8 per cent in August.

Economists had expected the September figure to come in at 2.7 per cent, according to Thomson Reuters Eikon.

The inflation report comes ahead of the Bank of Canada’s rate decision next week when it will also update its forecast for the economy in its monetary policy report.

The central bank, which aims to keep inflation within a target range of one to three per cent and adjusts its interest rate target to help achieve that goal, is expected to raise its key interest rate target, which sits at 1.5 per cent, by a quarter of a percentage point.

TD Bank senior economist James Marple said the softer-than-expected inflation report did little to alter TD’s expectation that the Bank of Canada will raise rates next week.

“I don’t think one month of soft price growth is going to change the Bank of Canada’s mind on a rate hike,” he said.

READ MORE: Bank of Canada holds interest rate at 1.5 per cent

Marple said the new U.S.-Mexico-Canada Agreement removed a key risk for the economy, but added challenges such as high household debt remain.

“There’s still are some underlying risks that have always been there and maybe weren’t in the spotlight because we were all focused on trade,” he said.

“We have very high household debt levels. We have mortgage rates that have been increasing and will continue to increase even with very little action from the Bank of Canada.”

Statistics Canada said prices were up in all eight major components for the 12 months to September.

The transportation index, which includes gasoline, was up 3.9 per cent in September compared with a 7.2 per cent move in August as gasoline prices last month were up 12 per cent compared with a 19.9 per cent increase in August.

However, the transportation group remained the largest contributor to the overall year-over-year increase in the index.

Food prices were up 1.8 per cent, while shelter costs rose 2.5 per cent. Alcoholic beverages and tobacco products were up 4.4 per cent.

Bank of Montreal chief economist Doug Porter noted the price of air fares, while up 7.4 per cent from a year ago, fell 16.6 per cent compared with the previous month. Hotel rates were also down 5.2 per cent compared with a year ago.

“With travel tours also down 3.2 per cent, that meant that tourism overall got a lot cheaper in Canada last month,” Porter wrote in a brief report, adding that vehicle prices were up just 0.7 per cent on a year-over-year basis.

“All of these soft sectors combined to clip core inflation as well, although the easing there was much less dramatic than in the headline tally,” Porter said.

The average of the three measures of core inflation, which look to strip out more-volatile items like gas prices and are closely scrutinized by the Bank of Canada, was 2.0 per cent in September compared with 2.1 per cent in August.

In a separate report, Statistics Canada said retail sales fell 0.1 per cent in August to $50.8 billion as sales moved lower in seven of 11 of the subsectors tracked by the agency.

Sales at gasoline stations were down 2.0 per cent, while clothing and clothing accessories stores fell 1.2 per cent. Motor vehicle and parts dealers saw sales increase 0.8 per cent.

Retail sales in volume terms were down 0.3 per cent.

Craig Wong, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Resolutions back on track with Vernon Wellness Fair

16th annual fair will showcase tons of products, gear to give that extra boost of motivation

Vernon ultra athlete ‘hearts’ ice baths

Shanda Hill and father carve stunning creations into ice at Ellison Lake

More snow for SilverStar

Pow days a plenty at Vernon’s own ski resort

Partnership aims to reduce risk of abuse for Armstrong city staff

Team up with Municipal Insurance Association to create plan to protect local government workers

Vernon Vipers getting Wild for opening round

Snakes will take on Wenatchee with the Wild holding home-ice advantage in Round 1

VIDEO: B.C.’s seventh coronavirus patient at home in Fraser Health region

Canada in ‘containment’ as COVID-19 spreads in other countries

Prescription opioids getting B.C. addicts off ‘poisoned’ street drugs

Minister Judy Darcy says Abbotsford pilot project working

Kelowna man arrested and released for threatening to stab people with a syringe

The incident is said to have occured downtown Kelowna on Friday

Royals, Elvis, Captain Cook: Hundreds of wax figures find new life in B.C. man’s home

Former director of Victoria’s Royal London Wax Museum still hopes to revive wax figure tourism

Teck CEO says Frontier withdrawal a result of tensions over climate, reconciliation

Don Lindsay speaks at mining conference, a day after announcing suspension of oilsands project

Father and children killed in fatal crash near Kamloops

The family was travelling from Southern Alberta

Okanagan man swims across Columbia River to evade Trail police

RCMP Cpl. Devon Reid says the incident began the evening of Thursday, Feb. 20

Breaking: Penticton woman pleads guilty to manslaughter of boyfriend

Kiera Bourque pleaded guilty in a Penticton courtroom on Monday

Summerland Steam end regular season in third place

Three Junior B hockey games held over past week

Most Read