TORONTO (Reuters) – Canada’s annual inflation rate accelerated to 4.4% in September, the highest since February 2003, and up from a year-over-year increase of 4.1% in August, Statistics Canada said on Wednesday.

Analysts polled by Reuters had expected the annual rate to rise to 4.3% in September.

COMMENTARY

ANDREW KELVIN, CHIEF CANADA STRATEGIST, TD SECURITIES

“We do see these inflationary pressures continue to work through the economy. We did see the core measures tick up as well on average, which does speak to growing underlying pressures. But, the Bank of Canada has been pretty adamant that they think this current inflationary surge is transitory. I don’t think this will change their mind.”

“If you look at the governor’s comments recently, they do still believe that there is good reason to believe that this is all related to a complicated reopening process. They have signaled that they expect inflation to be elevated into the middle of next year and they are evidently comfortable with that.”

“It’s a question of at what threshold would they start to become uncomfortable and that’s not an obvious thing to figure out from the fundamentals if you think that the surge is transitory.”