Statistics Canada says the consumer price index in August rose 4.1 per cent compared with a year ago, the largest year-over-year inflation increase since March 2003.
The jump compared with a gain of 3.7 per cent in July.
Fuelling much of the rise was higher gasoline and housing prices compared with the same month one year ago.
Excluding gasoline prices that rose year-over-year by 32.5 per cent in August, Statistics Canada says the annual inflation figure would have been 3.2 per cent last month.
The statistics agency also says homeowner replacement costs, which is related to the price of new homes, rose at an annual rate of 14.3 per cent in August.
The pace of housing prices was the fastest yearly increase since September 1987 and marked the fourth consecutive month of double-digit price growth.
Also driving up prices in August was rising prices for meat, which rose year-over-year by 6.9 per cent, the fastest pace since June 2020, which Statistics Canada says is in part because of growing demand from restaurants.
The consumer price index has been on an upward swing since the start of the year, and since April has clocked in above the Bank of Canada’s target range of between one and three per cent.
Governor Tiff Macklem has vowed that the central bank would step in if price pressures become persistent, but for now, the Bank of Canada sees much of the current issues as being temporary.
Statistics Canada said the average of the three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 2.57 per cent for August, up from 2.43 per cent in July. The August reading is the highest since March 2009.
CIBC senior economist Royce Mendes says the Bank of Canada will likely continue to look past the current figures because pressures don’t yet look be sustainable.
He writes in a note to investors that the annual inflation rate is likely to fall with the changing of the seasons in part because the fourth wave of COVID-19 is creating a headwind for the service sector.
This report by The Canadian Press was first published Sept. 15, 2021.
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