UPDATE 2-Canada inflation unchanged in Sept, well under target

Fri Oct 18, 2013 10:13am EDT
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* Overall inflation 1.1 pct annually, 0.2 pct monthly

* Core 1.3 pct annually, 0.2 pct monthly

* Inflation has been under BoC target since April 2012

* Forecast had been for 1.0 pct overall, 1.4 pct core

By Randall Palmer and Leah Schnurr

OTTAWA/TORONTO, Oct 18 (Reuters) - Canada's annual inflation rate held steady last month, while underlying price pressures were also unchanged, suggesting the Bank of Canada has plenty of room to maintain its low interest rate policy.

Annual inflation was 1.1 percent in September, the same as the month before, Statistics Canada said on Friday, slightly higher than economists' expectations for 1.0 percent.

The rise in prices was driven by higher shelter costs, as well as increases in the prices of food and transportation. Core inflation, which strips out volatile items and is closely watched by the Bank of Canada, also held steady at 1.3 percent, just below the market forecast of 1.4 percent.

Both figures were well below the Bank of Canada's target rate of 2.0 percent, reinforcing the view that there is no pressure for the central bank to increase rates when it announces its monetary policy decision next week.   Continued...