Canadian consumer prices fell 0.3% last month, the biggest monthly drop in two years.
What happened: The drop pulled year-over-year inflation down to 7% from 7.6% *collective sigh of relief* and more than a full percentage point below the 8.1% rate seen back in June.
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Gasoline prices fell 9.6% in August and are on pace to drop another 8% in September, dragging down the inflation rate with it.
- Core inflation (which excludes food and energy) slowed to 5.3% year-over-year, a sign of prices moderating economy-wide.
What they’re saying: “This is about as good of an inflation report as we can hope for, especially after the strong US figures last week,” BMO’s Benjamin Reitzes wrote in a note.
- Reitzes wrote that prices for services also fell for the first time in ~18 months.
Yes, but: Before you whip out your “inflation’s over” party hats, central bankers are far from out of the woods, with inflation still nowhere near the central bank’s target 2% rate.
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Mortgage interest costs surged 2.4% from the month before, the biggest increase seen since 1981—and higher interest rates guarantee that number will climb further.
- Food prices rose to 10.8% year-over-year, also the highest jump seen since 1981 (which we are now being reminded was a very, very bad year).
Bottom line: Inflation remains too damn high, but these numbers are encouraging and for now, will give markets the leeway to price in a slightly less aggressive rate hike in October.