September 2020 – inflation shows a slight increase in Canada

Last month, inflation was up slightly in Canada, although price pressures were still weak as the economy keeps recovering from the pandemic consequences.

According to Statistics Canada, annual inflation went up to 0.5% in September, following 0.1% seen in August and July. However, it’s still significantly lower than usually, as companies keep prices under control, considering the central bank’s promise to keep interest rates at historic lows in order to support growth.

The average of the core inflation measures rose slightly from 1.7% in August to 1.73% last month. Meanwhile, economist didn’t expect any changes at all.

The report shows that prices were down by 0.1% on a monthly basis, which coincides with the average forecast of a Bloomberg poll.

In case we exclude gasoline from calculations, we’ll see that consumer prices went up by 1%.

Such results suggest that social distancing measures and capacity limits on businesses keep the price pressures restrained and it will probably not change in the nearest future, as the second wave of COVID-19 may hit several large cities.

The inflation data and a retail sales release are the last main indicators the central bank will see before its next rate meeting on October 28.