Inflation rate slows to 2%, hitting the Bank of Canada’s target

Inflation slowed to two per cent in August, hitting the Bank of Canada’s target.

The reading was the slowest increase in the consumer price index since February of 2021, Statistics Canada said on Tuesday.

The deceleration was driven mainly by a drop in gasoline prices, which decreased by 5.1 per cent year-over-year in August, after an increase of 1.9 per cent the month before.

The biggest contributors to inflation remain mortgage interest costs and rent. Mortgage interests costs grew by 18.8 per cent in August, a slower pace than the year before at 30.9 per cent. If mortgage interest costs were excluded from the consumer price index basket, the inflation rate would be at 1.2 per cent.

Core inflation measures, which the Bank of Canada prefers to look at when making monetary policy decisions, continued to ease in August. CPI-common came in at two per cent, CPI-median decelerated to 2.3 per cent and CPI-trim sits at 2.4 per cent, all within the central bank’s target range.