Canada's annual inflation rate in August hits highest in nearly two decades

TORONTO (Reuters) – Canada’s annual inflation rate accelerated to 4.1% in August, the highest since 2003, up from a year-over-year increase of 3.7% in July, Statistics Canada said on Wednesday.

FILE PHOTO: A shopper exits a store holding multiple shopping bags in Sherway Gardens mall during the stage two reopening from coronavirus disease (COVID-19) restrictions in Toronto, Ontario, Canada June 30, 2021. REUTERS/Alex Filipe

Analysts polled by Reuters had expected the annual rate to rise to 3.9% in August.

STORIES:

Market reaction: CAD/

Link: here

COMMENTARY

JIMMY JEAN, CHIEF ECONOMIST AT DESJARDINS GROUP

“A big jump … It is really the mirror opposite of what we saw in the U.S. yesterday, where we had the travel components showing signs of cooling. Here, they are showing signs of heating up.”

“Very, very strong price pressures in categories where we know that there are labour shortages. There is always the possibility those sectors have to raise wages in order to attract employees and then pass that on to end-consumers.”

“It is still part of the reopening effect. In August we were still getting back to normal … That effect will eventually abate but for the time being we’re having inflation above 4%, so definitely something the Bank of Canada will keep in mind as it decides on its next move.”

Source: Read Full Article