Business

Canada's inflation rate slowed down to 2.2% last month

The annual pace of inflation slowed more than expected in September as increases in the price of gasoline eased compared with August.
Gasoline prices last month were up 12 per cent compared with a 19.9 per cent increase in August. (Gene J. Puskar/The Associated Press)

The annual pace of inflation slowed more than expected in September as increases in the price of gasoline eased compared with August.

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.

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 Canada set to raise rates next week

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 is widely expected to raise its key interest rate target, which sits at 1.5 per cent, by a quarter of a percentage point.

The Bank of Canada 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.

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.

Retail sales fell too

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

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