- Bank of Canada
Canada's annual inflation remained unchanged in August as lower gasoline prices offset the higher cost of food, suggesting the Bank of England has room to keep interest rates low. The nation's inflation was 1.3% in August measured on an annual basis, unchanged form July. At the same time core inflation, which strips out volatile components, declined to 2.1% from 2.4% in July. Prices rose on an annual basis in seven of the eight major components of the consumer price index. Food saw the biggest jump, with prices surging 3.6%, whereas gasoline prices continued to decline and were down 12.6% on a yearly basis.
Economists did not see the inflation figures to change the path of monetary policy. The Bank of Canada said that inflation has not surprised on the downside too much, largely evolving as expected. Total CPI stayed around the bottom of the bank's target range, while the core measure has remained close to 2%. The central bank is widely expected to hold rates at 0.50% when it meets next month, with markets pricing in just a 22% chance of a third rate cut in October. The central bank has cut interest rates twice this year in an attempt to support the economy that slid into mild recession in the first half of 2015.
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