Economists had expected interest rates to hit 7.3% after inflation climbed to a 40-year high of 8.1% earlier this summer.
Instead, interest rates have slowed more than expected, largely due to significantly cheaper gasoline over the course of the month.
Gas prices fell 9.6% in August from the previous month. This is the biggest gas price drop in a month since April 2020, when the pandemic just started.
Gasoline has gotten a little cheaper, while food prices have continued to rise, rising 10.8% over the past year.
This is the fastest increase in typical grocery bills since 1981.
“Food supplies continue to be impacted by multiple factors, including extreme weather, rising input costs, Russian aggression in Ukraine, and supply chain disruptions,” the data agency said.
Prices for edible fats and oils have risen by almost 28% over the past year, while coffee and tea prices have risen by more than 13%. Bakery products also stand out, and he has increased by more than 13% in the last 12 months.
Pedro Antunes, an economist at the Canadian Congress Committee, said high food prices are a problem, but he sees encouraging signs that some prices are starting to fall.
Statistics Canada said August prices for frozen meat, fish, eggs, nuts, and other proteins were lower than in July, although they were still rising on an annual basis.
“If you look at the prices of commodities like grains and red meat, some prices are starting to come down,” he said.
On a monthly basis, inflation fell by 0.3%. This is the biggest monthly cooldown since 2020. Also, the so-called core inflation rate (excluding volatile items such as food and energy) fell to 5.2% from 5.4% the previous month.
“The easing in core inflation is a strong signal that the Bank of Canada rate hike is having an impact,” said Tu Nguyen, an economist at consultancy RSM Canada.
But even the official inflation rate of 7% is more than double what the central bank wants. That means consumers and borrowers should expect more rate hikes.
“Food prices are still rising rapidly, and rapid wage growth means inflationary pressures remain. [so] It’s not time to completely breathe a sigh of relief yet,” Nguyen said.
Prince Edward Island resident Jennifer Cullen says inflation is far from under control for her family. One way I’ve been able to stretch my pennies is by shopping at thrift stores and thrift stores.
“My kids are very active and grow fast, so I swap shoes and clothes with one of my boys every two months,” she says while browsing the aisles at Repeats Clothing in Charlottetown. told CBC News.
Store owner Mary Matthews says she’s noticed a recent uptick in sales as her family runs out of budget. Her increased sales may be good for her bottom line, but her inventory costs are about double what they were last year, so her costs have increased as well.
“It’s hitting us all,” Matthews said. “Everything’s getting more expensive.”