Canada August inflation up to 3.1 percent

OTTAWA: Canada's annual inflation rate increased to a higher-than-expected 3.1 percent in August from 2.7 percent in July, in part due to higher prices for passenger vehicles and electricity, Statistics Canada data reported on Wednesday.

Market analysts had expected the annual rate to hit 2.9 percent in August. Prices grew by 0.3 percent in August from July, greater than the forecast 0.1 percent advance.

The data is unlikely to put much immediate pressure on the Bank of Canada, which expects inflation to gradually fall toward its 2.0 percent target.

The central bank, citing economic woes in Greece and the United States, made clear on Tuesday it was in no hurry to raise interest rates from near-record lows.

The annual core inflation rate, which excludes volatile items like gasoline, grew 1.9 percent in August from 1.6 percent in July.

Energy prices rose 13.4 percent during the 12 months to August, following a 12.9 percent increase in July. The price of passenger vehicles increased by 0.3 percent in the 12 months to August, compared with a 1.0 percent drop in the year to July.

Food prices climbed 4.4 percent in the year to August, compared with 4.3 percent in July.

Copyright Reuters, 2011