VIEW Canada’s annual inflation rate in August hits highest in nearly two decades
A consumer exits a retailer holding a number of buying luggage in Sherway Gardens mall throughout the stage two reopening from coronavirus illness (COVID-19) restrictions in Toronto, Ontario, Canada June 30, 2021. REUTERS/Alex Filipe
TORONTO, Sept 15 (Reuters) – Canada’s annual inflation fee accelerated to 4.1% in August, the very best since 2003, up from a year-over-year improve of three.7% in July, Statistics Canada mentioned on Wednesday.
Analysts polled by Reuters had anticipated the annual fee to rise to three.9% in August.
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COMMENTARY
DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS
“There’s definitely extra occurring than simply the reopening. We’re nonetheless seeing sustained strain on sturdy items specifically … It’s extremely notable that automobiles, furnishings and home equipment are all displaying very robust positive aspects from a yr in the past and contributing to each the headline and the core.”
“Having mentioned all that, this did not shock us and I do not assume it can shock the Financial institution of Canada, they had been searching for nearly 4% inflation within the third quarter.”
ANDREW KELVIN, CHIEF CANADA STRATEGIST, TD SECURITIES
“This does match with proof that this isn’t a wholly transitory phenomenon… There are solely actually two interpretations of this. One, it is nonetheless transitory however with a a lot larger peak, or two, it’s, in reality, a little bit extra persistent than we would feared. In the end we’d like extra time to find out what the true reply is right here.”
“There was a really important upside from contributions from air fares, which is one thing that might usually materialize in prior months however due to the unusual seasonality we now have on this late pandemic surroundings, it materialized at this time.”
“This does not imply something short-term for the Financial institution of Canada. They have been very insistent that the inflation shock is transitory. We might even see them cut back a few of their estimates of potential progress, which can suggest a smaller output hole at this time and thru the previous, as a approach of reconciling the extra persistent inflation shocks with their outlook for provide within the economic system.”
JIMMY JEAN, CHIEF ECONOMIST, DESJARDINS GROUP
“An enormous bounce … It’s actually the mirror reverse of what we noticed within the U.S. yesterday, the place we had the journey elements displaying indicators of cooling. Right here, they’re displaying indicators of heating up.”
“Very, very robust worth pressures in classes the place we all know that there are labour shortages. There’s at all times the chance these sectors have to lift wages with a view to entice staff after which cross that on to end-consumers.”
“It’s nonetheless a part of the reopening impact. In August we had been nonetheless getting again to regular … That impact will ultimately abate however in the meanwhile we’re having inflation above 4%, so positively one thing the Financial institution of Canada will have in mind because it decides on its subsequent transfer.”
Reporting by Fergal Smith, Nichola Saminather
Enhancing by Denny Thomas
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