Canada's inflation rate hits 4.4% in September, highest level since 2003

WATCH: Canada's inflation rate rose to 4.4 per cent in September, a level not seen since February 2003, according to Statistics Canada. Anne Gaviola looks at the impact on the cost of food and gas, and interest rates.

Statistics Canada says the annual pace of inflation picked up in September to reach its highest level since February 2003.

The agency says its consumer price index in September was up 4.4 per cent compared with a year ago.

The reading compared with a year-over-year increase of 4.1 per cent in August.

Driving most of the increase were prices at the pumps as consumers paid 32.8 per cent more last month for gasoline than in September 2020.

The statistics agency says the annual inflation rate would have been 3.5 per cent had it excluded gasoline prices from its calculation.

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Statistics Canada also says that food prices overall rose 3.9 per cent year-over-year, compared to the 2.7 per cent recorded in August.

The pace of overall price increases in August reflected the rebound in prices from the lows witnessed one year earlier, a surge in consumer demand and supply-chain bottlenecks that have driven up transport costs, which are being passed on to buyers.

Those bottlenecks haven’t abated, and Bank of Canada governor Tiff Macklem said last week that they have proven more persistent than first believed.

September’s reading marked the sixth consecutive month that headline inflation has clocked in above the Bank of Canada’s target range of between one- and three-per-cent.

 

Statistics Canada says the average of the three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 2.67 per cent for September, up from 2.6 per cent in August.

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The September reading is the highest since December 2008.

CIBC senior economist Royce Mendes says the central bank’s indicators for inflation suggest the economy has yet to fully heal from the pandemic, and likely leave the Bank of Canada to see the recent rise in prices as temporary.

Macklem has said the central bank would act to rein in inflation if the current bout of price increases look to become more than one-off pressure points.

© 2021 The Canadian Press

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