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Canada inflation hits 18-year-high with election just days away By Reuters


© Reuters. FILEPHOTO: The entrance of Forever 21’s fashion store is stocked with clothing and footwear. This was in Toronto on September 30, 2019. REUTERS/Chris Helgren

By Julie Gordon

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

Statistics Canada stated that August’s rate of inflation rose to 4.1%, the highest pace since March 2003. It beat analyst expectations and prompted Trudeau to take aim at his main rival over rising costs of living.

Erin O’Toole of the Conservatives’ main opposition, said in a statement that today’s numbers “make it clear that Canadians are facing an affordability crisis” under Justin Trudeau.

The Conservatives have a narrow lead over Trudeau’s Liberals at 31.2% to 30.5% just days before the Sept. 20 vote, according to a new Nanos Research poll. With 21.4%, left-leaning New Democrats come in third.

The world is facing a hot inflation crisis. There are supply chain problems and shortages, and restrictions that are being tightened as each wave of the virus arrives. It has led to high demand and supply issues.

The Bank of Canada stated that it expected headline inflation to stay above its 1% to 3% control level this year before returning to the 2% target for 2022.

Bank of Canada said that “this doesn’t signify anything short-term.” Andrew Kelvin (chief Canada strategist, TD Securities), said that they have been insistent on the fact that the inflation shock will pass.

The hot inflation print in Canada was caused by rising gasoline prices and higher housing costs. There also increased prices for goods such as furniture and appliances, and high travel costs, which were eased.

That was the opposite of the United States, where a harsh fourth wave has put a damper on travel.

This is the opposite to what happened in the U.S. Yesterday, when the components of travel showed signs of cooling. According to Jimmy Jean (chief economist, Desjardins Group), they’re heating up.

It is part of the opening effect. Jean stated that August was still a normal month.

Reuters analysts polled expected that August’s annual inflation rate would rise to 3.9%. This was the highest inflation rate since March 2003’s 4.2%.

Each of the three main measures of core inflation saw gains. CPI common, which the Bank of Canada calls the best gauge of the economy’s underperformance, edged up to 1.8% from 1.7% in July.

Canadian Dollar traded 0.2% higher at 1.2663 USD, which is 78.97 U.S.cs.

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