Canada’s inflation rate soared to 4% last month, prompting economists to warn that the latest consumer price index report will be bad news for the Bank of Canada.
On Tuesday, Statistics Canada announced its latest inflation data, which showed that the annual rate increased from 3.3 percent in July to 3.3 percent in August, marking the second month in a row that inflation has increased.
Forecasters widely expected increasing gasoline costs to drive inflation higher last month. However, the assessment released on Tuesday was even more negative than many expected.
On October 25, the central bank will issue its next interest rate decision, which economists say has become more difficult.
The Bank of Canada decided earlier this month to keep its benchmark interest rate unchanged as the economy weakens.
According to recent figures, the economy shrunk in the second quarter, while the jobless rate rose.
Statistics Canada also released its latest employment vacancy report on Tuesday, which showed that vacancies are continuing to climb.
Now, the central bank must compare that data against higher inflation estimates to determine which is more important.
The report’s one silver lining is that grocery prices are rising more slowly, with prices up 6.9 percent from a year ago compared to 8.5 percent last month.
Meanwhile, in July and August, grocery costs fell by 0.4%. Higher grocery prices have been a big source of frustration for Canadian families, especially those with lower incomes who spend a greater proportion of their wages on food.
On Monday, Industry Minister Francois-Philippe Champagne met with top executives from Canada’s biggest grocery chains to explore price-stabilization measures.
Following the discussion, Champagne stated that the grocers agreed to collaborate with the federal government, but no specifics on how prices may be stabilized were revealed.