Canadian consumers are continuing to absorb price hikes at a rate beyond what policy-makers see as ideal, according the latest data.
Annual inflation was running at 3.1% in August, Statistics Canada said Wednesday. Economists had been expecting a reading of 2.9% following the 2.7% seen in July.
The Bank of Canada's policies are aimed at keeping inflation as close to 2% as possible. It hasn't been that low since last November, and five of the eight months reported so far this year have seen inflation in excess of three per cent.
Core inflation, which excludes volatile items such as energy and some foods, was 1.9% last month. Economists had predicted it would stay at 1.6%, as it had been in July.
Statistics Canada said items such as passenger vehicles, electricity, home insurance, telephone services and jewelry were largely responsible for the higher inflation rate in August.
Gasoline continued to be a major factor in overall inflation, but less so than during the previous month. August pump prices were found to be 22.8% higher than a year before, compared to July, when they were up 23.5%.
Overall energy prices were 13.4% higher in August than 12 months before.
All the eight major product components saw year-to-year rises in prices. Transportation costs, which include gasoline but also things such as vehicle insurance and airfares, were up 7% last month.
Food costs were 4.4% more. This includes 6.1% inflation for bakery and cereal products, 5.7% for meat, and 3.4% for dairy products and eggs.
Shelter costs rose 1.8% on a year-to-year basis; general household costs climbed two per cent; clothing and footwear was up 0.6%; health and personal-care products were up 0.9%; recreation, education and reading prices rose 1.3%; and alcohol and tobacco costs were up 1.3%.
On a month-to-month basis, the seasonally adjusted rate of inflation last month was 0.3%, up from 0.1% in July.
The Bank of Canada aims for overall annual inflation of 2%, though it watches the core rate closely for underlying trends.
The central bank's overnight interest rate has been at a relatively low 1% for more than a year to help facilitate economic growth. Central banks, however, must balance that goal against the fact that low interest rates can fuel inflation trends.
Most provinces saw their yearly inflation rates rise in August, particularly Alberta where it jumped a full percentage point to 2.9%. Ontario was in line with the national average at 3.1%. New Brunswick was the highest at 4.1%, while British Columbia was the lowest at 2.1%.
