Canadian dollars fall in a photo illustration in Vancouver, Sept. 22, 2011. Statistics Canada says the consumer price index in September was 2.2% per cent compared with a year ago. THE CANADIAN PRESS/Jonathan Hayward

Annual pace of inflation slows to 2.2 per cent in September: Statistics Canada

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

The annual pace of inflation slowed more than expected in September as increases in the price of gasoline continued to ease.

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.

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

TD Bank senior economist James Marple said the softer-than-expected inflation report did little to alter TD’s expectation that the Bank of Canada will raise rates next week.

“I don’t think one month of soft price growth is going to change the Bank of Canada’s mind on a rate hike,” he said.

READ MORE: Bank of Canada holds interest rate at 1.5 per cent

Marple said the new U.S.-Mexico-Canada Agreement removed a key risk for the economy, but added challenges such as high household debt remain.

“There’s still are some underlying risks that have always been there and maybe weren’t in the spotlight because we were all focused on trade,” he said.

“We have very high household debt levels. We have mortgage rates that have been increasing and will continue to increase even with very little action from the Bank of Canada.”

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 Montreal chief economist Doug Porter noted the price of air fares, while up 7.4 per cent from a year ago, fell 16.6 per cent compared with the previous month. Hotel rates were also down 5.2 per cent compared with a year ago.

“With travel tours also down 3.2 per cent, that meant that tourism overall got a lot cheaper in Canada last month,” Porter wrote in a brief report, adding that vehicle prices were up just 0.7 per cent on a year-over-year basis.

“All of these soft sectors combined to clip core inflation as well, although the easing there was much less dramatic than in the headline tally,” Porter said.

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.

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.

Craig Wong, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Canadiana complete when Murray McLauchlan’s in the house

Legendary singer/songwriter brings his folksy talents to the McPherson on June 13

So, they found ‘Dave from Vancouver Island’

Dave Tryon, now 72, will reunite with long-ago travelling friends in Monterey, Calif.

COLUMN: Motoring along sure to be different with changes to cars, infrastructure

Younger generation seems intent on creating a more efficient planet

Vancouver Islander pens Mourning Has Broken following death of her daughter

Book by radio host Erin Davis gives advice to others struggling with grief

Volunteers already rescuing fry from drying creekbeds around Cowichan Lake

It’s early but already salmon fry are being left high and dry

New airline regulations bring compensation for tarmac delays, over-bookings

Some of the new regulations will roll out in July, while others are expected for December.

Five takeaways from the Court of Appeal ruling on B.C.’s pipeline law

It’s unclear how many tools are left in B.C.’s toolbox to fight the project

Pacific Rim National Park Reserve investigating after sea lion found shot in the head

Animal is believed to have been killed somewhere between Ucluelet and Tofino

Woman assaulted at Bill Moore Park in Courtenay

Female grabbed from behind Thursday morning

Scheer says it would take Conservatives five years to balance budget

Scheeraccused the Liberal government of spending $79.5 billion of previously unbudgeted funds

Vancouver woman sexually assaulted after man follows her home; suspect at large

Police are looking for an Asian man in his 40s after the incident on Vancouver’s east side.

B.C. man, 30, arrested for driving his parents’ cars while impaired twice in one day

The Vancouver-area man was arrested after officers caught him driving impaired twice in one day

More than half of Canadians support ban on handguns, assault rifles: study

Divide between rural and urban respondents in latest Angus Reid Institute public opinion study

Most Read