Canada’s inflation rate rises more than expected

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On a monthly basis, the index rose 0.6 per cent, double expectations.

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The first re-acceleration since April puts the rate above the Bank of Canada’s target range of one to three per cent.

“There’s no sense sugar coating this one — it is not a good report for the Bank of Canada,” wrote BMO chief economist Douglas Porter in a note after the data came out.

“We still believe that with the recent upswing in the unemployment rate and clear signs of cooler spending that the BoC would prefer to move to the sidelines in September and give prior hikes time to work, but the inflation figures will make it a tougher call.”

Statistics Canada said the rise in inflation was due to gas prices falling less on an annual basis than they did in June.

Excluding energy prices, the consumer price index decelerated to 4.2 per cent, down from 4.4 per cent in June.

Food prices rose at a slower pace than the month before, up 8.5 per cent from the year before.

More to come …