Inflation steady at 1.3% in August: Statcan

The gasoline index within transportation was down 12.6 per cent, continuing a trend that began late past year , and prices for new passenger vehicles increased less in August than in July.

The main inflationary pressures on the consumer price index last month came from food costs and household operations.

Core inflation, which strips out volatile items and is closely watched by the Bank of Canada, was less muted at an annual pace of 2.1%, though that was down from 2.4% the previous month.

Prices for seven of eight major components of the consumer price index were up from a year ago, but that was offset by a drop in energy prices.

Food costs as measured by the consumer price index rose 3.6 per cent, including a 6.3 per cent increase for meat, Statistics Canada said Friday in Ottawa.

The central bank is widely expected to hold rates at 0.50 percent when it meets next month, with markets pricing in just a 22 percent chance of a third rate cut in October.

Price growth for clothing and footwear also accelerated in August, rising by 2.1% y/y, following a 1.3% increase in July.

In Manitoba, Saskatchewan and Alberta, consumers paid higher prices for gasoline in August than in July, due in part to an unplanned partial maintenance shutdown at a refinery in the American Midwest, it said.

Core inflation has been boosted by “transitory effects” from the drop in Canada’s dollar and some “sector-specific factors”, the Bank of Canada said last week in its interest- rate decision.

“After contracting during the first half of this year, the second half of 2015 is shaping up to be much better for the Canadian economy, with a recovery likely underway”.

Oil and gasoline prices remain well below levels seen a year ago, and continue to weigh on headline inflation.

The rate matched economists’ forecasts.