Annual inflation cooled sharply to two per cent in August, according to Statistics Canada, marking a major milestone in the Bank of Canada’s efforts to tame price pressures.
That’s sharply lower than the 2.5 per cent annual rate recorded in July and continues a general cooling trend through 2024.
The last time inflation was at or below two per cent was in early 2021.
Statistics Canada pointed to cheaper prices on gasoline as driving down the headline inflation figure in August. Without the drop in gas prices, annual inflation would’ve been 2.2 per cent in August, StatCan said.
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Grocery prices rose 2.4 per cent annually in August, up from 2.1 per cent in July, mostly because of comparisons to sizeable price movements the same time last year.
On a monthly basis, grocery prices were down 0.2 per cent from July to August, StatCan noted, thanks largely to seasonal drops in fresh vegetable costs.
The Bank of Canada’s sets its benchmark interest rate in an effort to achieve two per cent inflation, according to its mandate, with the view that a two per cent rate of annual price growth provides stability for households making decisions.
The central bank hiked its benchmark rate rapidly starting in March 2022 as inflation soared to 40-plus-year highs, but has since started to adjust rates lower with growing confidence that price pressures are back under control.
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