Gas, Airfares Drive Inflation Higher in August

Canada's inflation rate inched up to 1.4% in August as transportation costs such as gasoline and airplane tickets grew more expensive.

Figures released Friday by Statistics Canada showed that transportation costs rose by 2.8%in the year up to August... up from a 1.9% annual increase the previous month.

What's more, fuel prices were a major driver of the increase in the consumer price index, as gasoline prices advanced 8.6% in the past year. In addition to prices at the pump, Canadians paid more to fly during the month as, the agency said, "air transportation costs grew at a greater rate on a year-over-year basis in August than in July."

After hitting a two-year low earlier this summer in June, the cost of living is ticking steadily higher, and economists expect that trend to continue. Meantime, the overall inflation rate jumped in every province except Manitoba, where it was unchanged at 0.9%.

The inflation rate is one of the major factors that the Bank of Canada looks at in setting interest rates.