Canada's annual inflation rate in August jumped to 4.0 per cent from 3.3 per cent in July due to higher gasoline prices, while two of three measures of core inflation also rose, Statistics Canada reported on Tuesday.
Analysis cited by Reuters predicts inflation will reach 3.8 percent. Compared to the previous month, the consumer price index increased by 0.4 percent compared to the forecast increase of 0.3 percent.
The rate in August was the highest since a reading of 4.4 per cent in April, well above the Bank of Canada's target of 2 per cent. The main driver was a 0.8 per cent annual increase in petrol prices, which had fallen by 12.9 per cent in the 12 months to July.
Two of the Bank of Canada's three core inflation measures also posted increases. CPI-median increased to 4.1 percent from 3.9 percent in July while CPI-trim increased to 3.9 percent from 3.6 percent.
Housing prices in August rose by 6.0 percent after a 5.1 percent increase in July, due to higher rents and higher interest rates.
On September 7, the Governor of the Bank of Canada, Tiff Macklem, predicted that "core inflation will increase in the near term before it gradually decreases."
On September 6, the central bank kept its key overnight interest rate at 5 percent, noting that the economy has entered a period of weaker growth, but said it could raise borrowing costs again if inflationary pressures persist.
The US dollar further weakened against the Canadian currency to trade at 1.3409 after the CPI data was released.
