Close X
Friday, November 1, 2024
ADVT 
National

Canada's inflation rate jumps to 4%, making the BoC's next rate decision harder

Darpan News Desk The Canadian Press, 19 Sep, 2023 09:53 AM
  • Canada's inflation rate jumps to 4%, making the BoC's next rate decision harder

Canada's inflation rate jumped to four per cent last month, as economists warn the latest consumer price index report spells bad news for the Bank of Canada. 

Statistics Canada released its latest inflation reading on Tuesday, which shows the annual rate rose from 3.3 per cent in July, marking the second consecutive month inflation has risen.

Forecasters were widely anticipating inflation to come in hotter last month due to higher gasoline prices. But Tuesday's report was even more discouraging than many expected. 

"What is the most concerning is that (inflation) accelerated more than (expected) and that we also saw some core measures of inflation that the Bank of Canada track, accelerate as well," said Andrew Grantham, CIBC's executive director of economics. 

Core measures of inflation strip out volatility in prices and play a significant role in how the Bank of Canada judges inflationary pressures.

With this latest uptick in price growth, Grantham said inflation during the third quarter is now on track to come in higher than the Bank of Canada forecasted in July.

The central bank is slated to make its next interest rate decision on Oct. 25 — a decision that economists say just got tougher. 

"This is a very difficult decision," said Grantham.

Earlier this month, the Bank of Canada decided to hold its key interest rate steady at five per cent earlier this month as the economy slows.

Recent data showed the economy shrank in the second quarter while the unemployment rate has trended higher. 

Statistics Canada released its latest job vacancies report Tuesday as well, which shows vacancies continue to rise. 

Now, the central bank will have to weigh that data against higher inflation figures and decide which matters more.

"Our view at the moment is that they're going to place weight on the weakening of the economy," Grantham said, though he noted the next rate decision will be a "close call."

Other Bay Street economists shared similar takes on Tuesday. 

"We expect further signs of slowing will help the Bank to continue to stand on the sidelines, as outlined in our recent forecast. However, today's inflation report has raised the odds they may need to make another move," said TD managing director and senior economist Leslie Preston in a client note. 

The Bank of Canada will have a chance to react to the latest inflation numbers, as deputy governor Sharon Kozicki is set to deliver a speech this afternoon at the University of Regina. 

A slight silver lining to Tuesday's report is that grocery prices are rising more slowly, with prices up 6.9 per cent from a year ago compared with a reading of 8.5 per cent last month.

Meanwhile, grocery prices fell by 0.4 per cent between July and August.

"I do think that the rate of inflation for groceries will continue to decelerate," Grantham said. 

"(But) if you're the average Canadian, average household, you don't want prices to just stop rising, you want them to kind of come down a little bit from these very high levels. I'm not sure that's going to happen anytime soon, unfortunately."

Higher grocery prices have been a major pain point for Canadian families, particularly those with lower incomes who spend a larger share of their earnings on food.

Industry Minister François-Philippe Champagne met with top executives of Canada’s major grocery chains on Monday to discuss measures to stabilize prices. 

After the meeting, Champagne said the grocers agreed to work with the federal government, but few details were provided on how prices could be stabilized.

MORE National ARTICLES

Evacuation orders issued near Peachland, more than 400 wildfires burn across B.C.

Evacuation orders issued near Peachland, more than 400 wildfires burn across B.C.
An evacuation order has been issued for eight recreational properties due to the Glen Lake Wildfire, about 15 kilometres west of Peachland, B.C. The Central Okanagan Emergency Operations Centre says it also issued an evacuation alert for all areas south of Peachland Forest Service Road from the 5 kilometre marker to the boundary between the Regional District of Central Okanagan and the Regional District of South Okanagan.  

Evacuation orders issued near Peachland, more than 400 wildfires burn across B.C.

Bonnie Henry talks drug decriminalization at start of B.C. municipalities convention

Bonnie Henry talks drug decriminalization at start of B.C. municipalities convention
Provincial health officer Dr. Bonnie Henry will be discussing drug decriminalization and public drug use in the opening session of the annual Union of British Columbia Municipalities convention in Vancouver. More than 2,000 people are registered to attend the annual gathering of elected municipal leaders that concludes Friday with a speech by Premier David Eby.  

Bonnie Henry talks drug decriminalization at start of B.C. municipalities convention

Abbotsford police say two victims stabbed, suspect suffered self-inflicted injuries

Abbotsford police say two victims stabbed, suspect suffered self-inflicted injuries
Police in Abbotsford, B.C. say a Saturday evening stabbing that sent three people to hospital, including the suspect, appears to have been a targeted attack. Officers were called to a residential complex on McCallum Road south of Marshall Road shortly before 7:00 p.m. Saturday for a weapons call. 

Abbotsford police say two victims stabbed, suspect suffered self-inflicted injuries

Burnaby shooting victim identified as Gagandeep Sandhu

Burnaby shooting victim identified as Gagandeep Sandhu
Burnaby RCMP say they were called to the North Road and Cameron Street area just after 5 p.m. Saturday for reports of gunshots and arrived to find the body of a man in a parkade. They say initial evidence suggests this was a targeted shooting, though the motive remains unclear.  

Burnaby shooting victim identified as Gagandeep Sandhu

'Bunch of idiots': Victim relatives query psychiatric releases, lawyers urge caution

'Bunch of idiots': Victim relatives query psychiatric releases, lawyers urge caution
Rebecca Mayrhofer said she felt "100 per cent frustrated" when she heard about a triple stabbing in Vancouver's Chinatown on the weekend, that police allege was committed by a man on day release from psychiatric detention. But she wasn’t surprised.

'Bunch of idiots': Victim relatives query psychiatric releases, lawyers urge caution

Victim 'punched' at New West SkyTrain

Victim 'punched' at New West SkyTrain
Police in New Westminster say they're on the lookout for a suspect in an alleged assault that occurred at the New Westminster SkyTrain Station this morning. New Westminster Police say the victim was punched by a stranger and knocked to the ground at the top of the escalators at the station's entrance on Eighth Street. 

Victim 'punched' at New West SkyTrain