MNI DATA IMPACT: Canada Aug CPI is +1.9%, Above BOC Forecast>

By Greg Quinn and Anahita Alinejad

     OTTAWA (MNI) - Canada's inflation rate held close to the central 

bank's 2% target in August, continuing to exceed the projections of 

policy makers, on gains in food and shelter. 

     The consumer price index advanced 1.9% in August from a year 

ago, matching the MNI economist median after a 2% increase in 

July. The CPI declined 0.1% in August from July, stronger than the MNI 

median calling for a 0.2% decrease. 

     The average of the central bank's three measures of core prices 

remained at 2.0% in August. The average reached 2.1% in May, the 

strongest since 2012.

     Food prices rose 3.6% in August from a year ago, and shelter prices 

by 2.4%, Statistics Canada said Wednesday from Ottawa. Overall inflation 

was pushed down by a 10% drop in gasoline, and excluding that item CPI 

climbed 2.4%, the same pace as July.

     Inflation remains poised to beat the Bank of Canada's third-quarter 

forecast of 1.6%, a big reason policy makers may resist pressure to 

match Fed and ECB rate cuts. The Bank earlier this month affirmed 

inflation is around its 2% target and the economy is around full 

capacity, while noting global trade tensions remain a key risk.

     Recent tensions in the Middle East could also drive up gasoline 

prices, though the Bank of Canada would likely see that as a temporary 

effect. 

     --MNI Ottawa Bureau +1 613-314-9647; greg.quinn@marketnews.com 

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