Canada’s Inflation Rate Climbs 4.1 Per Cent In August, Highest Recorded Since 2003

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Infographic Source: Statistics Canada

OTTAWA: Canada’s inflation or The Consumer Price Index (CPI) climbed steeply 4.1% on a year-over-year basis in August, the highest level since March 2003, up from a 3.7% gain in July.

The inflation rate mainly stems from an accumulation of recent price pressures and from lower price levels in 2020. Excluding gasoline, the CPI rose 3.2% year over year.

Statistics Canada reported Wednesday the monthly CPI rose 0.2% in August, down from a 0.6% increase in July. On a seasonally adjusted monthly basis, the CPI rose 0.4%.

The agency said the a major contributor to inflation has been durable goods which rose at a faster pace in August (+5.7%) compared with July (+5.0%), with passenger vehicles (+7.2%), furniture (+8.7%) and household appliances (+5.3%) contributing the most to the increase.

In addition, prices for services have accelerated for the fifth consecutive month, rising at a faster pace in August (+2.7%) compared with July (+2.6%) amid easing of COVID-19 restrictions. Year over year, prices for traveller accommodation rose 19.3%.

Reopening of businesses and summer travel contributed to the price increases. Figures show that transportation prices contributed the most to the general increase, while prices for items like clothing and footwear showed a decline over the year. Year over year, gasoline prices rose 32.5% in August, mainly driven by lower production from oil-producing countries compared with pre-pandemic levels.

Also contributing to the year-over-year increase were the low price levels observed in August 2020. Gasoline prices rose 0.4% month over month in August. Upward pressure on prices near the end of the month—as some offshore production was suspended due to Hurricane Ida—was partially offset by slowing global demand due to concerns associated with the rise of the Delta variant of COVID-19.

The Statistics Canada report said: “Year over year, gasoline prices rose 32.5% in August, mainly driven by lower production from oil-producing countries compared with pre-pandemic levels. Also contributing to the year-over-year increase were the low price levels observed in August 2020.

“Gasoline prices rose 0.4% month over month in August. Upward pressure on prices near the end of the month—as some offshore production was suspended due to Hurricane Ida—was partially offset by slowing global demand due to concerns associated with the rise of the Delta variant of COVID-19.”

As expected, the price of new homes continued to climb, rising some 14.3% year over year in August – registering the largest yearly increase since September 1987. Statistics Canada said this was the fourth consecutive month of double-digit price growth.

“Similarly, the other owned accommodation expenses index, which includes commission fees on the sale of real estate, rose 14.3% year over year in August,” it was stated.

With regard to the burgeoning digital economy in Canada, it was noted that the consumption patterns of Canadians have changed, with more people opting to purchase goods and services online and this resulted in online spending rising by almost half from From 2018 to 2020.

The StatCan report said: “Canadianconsumption of online entertainment activities, such as streaming video content online, increased. The video and audio subscription services index, which includes video streaming services, rose 5.8% year over year in August.”

As the digital economy evolves, Statistics Canada will continue to monitor and incorporate new goods and services in order to maintain relevance and reflect changes in consumer spending, the agency said.

The travel sector has also been hit by inflationary trends. Traveller accommodation price index rose a whopping 19.3% year over year in August. Prices climbed in every province, as travel restrictions eased.

Prices rose the most in British Columbia (+26.9%), but price increases were also seen in Newfoundland and Labrador (+26.3%), New Brunswick (+23.4%), Quebec (+22.5%) and Ontario (+21.2%).

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