This rate fell below analysts' expectations of a 1.4 percent increase in the overall price index, year-on-year. The inflation rate in July stood at 1.3 percent.
Food prices rose 1.1 percent in August from the year before, after a 1.6 percent increase in July.
Prices for food purchased from stores saw their smallest year-on-year rise since June 2010, up just 0.4 percent in August.
The costs of recreation, education and reading also rose more slowly, year-on-year, in August than in July, as the prices of travel tours fell 5.6 percent.
Transportation prices rose 0.3 percent in August year-on-year, after falling by 0.2 percent in July.
Gasoline prices posted a smaller year-on-year decrease in August (-11.5 percent) than in July (-14.0 percent). Passenger vehicle purchases were up 5.2 percent in August, year-on-year, after a 5.4 percent rise in July.
On a monthly basis, consumer prices slipped 0.1 percent in August, after remaining unchanged in July.
The Bank of Canada's core index, which excludes the most volatile sectors like energy, rose 1.8 percent in August, year-on-year, after a 2.1 percent rise in July.
This increase was slightly below the two percent target set by the central bank as part of its monetary policy.