Canada’s inflation reaches a 18-year high with elections just days away

OTTAWA, Sept. 15 (Reuters) – Canada’s annual inflation rate accelerated to an 18-year high in August, driven by strong upward pressures, according to data shown on Wednesday, just days before the hotly contested federal election that could see Prime Minister Justin Trudeau Liberals ousted.

The rate rose to 4.1% in August, its fastest clip since March 2003, said Statistics Canada, which exceeded analysts’ estimates and caused Trudeau’s main rival to jump on the ‘rising cost of living.

“The numbers released today make it clear that under Justin Trudeau, Canadians are experiencing an affordable crisis,” Erin O’Toole, leader of the main opposition Conservatives, said in a statement.

Conservatives have a narrow lead over Trudeau’s Liberals, from 31.2% to 30.5%, just days before the Sept. 20 vote, according to a new Nanos Research poll. Left-wing New Democrats are in third place, with 21.4%.

Countries around the world are facing hot inflation amid supply chain barriers and labor shortages as constraints tighten and tighten with each new wave of the virus. , which leads to hectic demand and bottlenecks in supply.

The Bank of Canada has said it expects headline inflation to remain above its control range of 1% to 3% this year, before falling back to the 2% target in 2022.

“This means nothing in the short term for the Bank of Canada. They have strongly insisted that the inflation shock be transitory,” said Andrew Kelvin, Canadian chief strategist at TD Securities.

In Canada, hot inflation was driven by high gasoline prices, rising housing costs and rising prices for goods such as furniture, appliances and vehicles, along with high costs related to travel as restrictions were reduced.

This was the opposite of the United States, where a harsh fourth wave has slowed travel.

“It’s really the opposite mirror to what we saw yesterday in the US, where we had the components of the trip showing signs of cooling. Here they show signs of warming,” said Jimmy Jean, chief economist at the Desjardins group.

“It’s still part of the reopening effect. In August, we were still back to normal,” Jean added.

Analysts polled by Reuters expected the annual inflation rate to rise to 3.9% in August. It was 4.1% higher than the 4.2% recorded in March 2003.

The three measures of core inflation recorded gains. The common CPI, which the Bank of Canada calls the best indicator of the low performance of the economy, rose to 1.8%, from 1.7% in July.

The Canadian dollar traded up 0.2% at 1.2663 to the green dollar, or 78.97 US cents.

Additional reports by David Ljunggren in Ottawa and Fergal Smith and Nichola Saminather in Toronto; Edited by Andrew Heavens, Paul Simao and Andrea Ricci

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