Inflation jumped
4.1% in August, the highest it’s been since 2003.
Refresher: The Bank of Canada targets a 2% inflation rate, but is generally comfortable with a rate that sits between 1-3%. We saw an inflation rate of 3.7% in July, which is already past the Bank of Canada’s target range.
Gas prices and homeowners' replacement cost index, a metric that’s tied to the cost of new homes, were the largest contributors to inflation growth.
- The homeowner's replacement cost index increased by 14.3% year-over-year;
- Gas prices jumped 32.5%;
- New car prices are up 7.2%;
- Meat prices are up 6.9%
South of the border: Canada’s inflation patterns tend to mirror those of the U.S., but at a smaller scale. The U.S., which lifted its public health restrictions earlier than Canada did, reported a 5.3% inflation rate in August, down 0.1% from the previous month. If that’s any indication, Canada’s consumer prices
may also ease up in the coming months.
Bottom line: The Bank of Canada reiterated, like it has all year, that the uptick is temporary. Regardless, August’s inflation numbers will likely be a
focal point in the run-up to the election.