Inflation ticks higher to 1.9% in August, short of economists’ expectations

Some stubbornness at the gas pumps pushed the headline inflation rate a couple ticks higher to 1.9% in August, Statistics Canada said Tuesday.

Gasoline prices rose 1.4% month-over-month in August as higher refining margins offset lower crude costs, StatCan said.

The price of gas was still down 12.7% annually in August–the end of the consumer carbon price has deflated costs for motorists since the spring–but the decline fell short of July’s 16.1% drop, pushing the headline inflation rate higher.

Heading into the release, economists had broadly expected inflation would rise to 2%, from 1.7% in July.

Stripping out gas prices, inflation came in at 2.4% in August, down a tick from the past three months.

Inflation data show it was a mixed bag at the grocery store last month.

The cost of groceries rose 3.5% annually in August, up a tenth of a point from July.

StatCan said price growth for meat accelerated to 7.2% in August from 4.7% the previous month as the cost of fresh and frozen beef surged 12.7%.

Meanwhile, the cost of fresh fruit fell 1.1%, reversing course on a 3.9% gain in July, thanks largely to lower prices for grapes and cherries.

Rising rents and mortgage interest costs remain the biggest factors pushing the annual inflation rate higher.

StatCan said fewer back-to-school deals for cellphone plans meant prices for cellular services also rose on a monthly basis in August.

Weak Canadian demand for visiting the United States last month meanwhile helped push prices for travel tours down 9.3% compared with a year ago, the agency said.

The Bank of Canada will have a day to digest the new price readings before the central bank makes its interest rate decision.

Heading into the inflation release, most economists expected the Bank of Canada would deliver a quarter-point cut on Wednesday.