UPDATE 2-Canada annual inflation eases in August to 1.1 pct

Fri Sep 20, 2013 9:25am EDT
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* Annual inflation eases to 1.1 pct from 1.3 pct

* Core rate also tame at 1.3 pct

* Year-on-year rates in line with market forecasts

* No pressure on Bank of Canada to raise rates

By Louise Egan

OTTAWA, Sept 20 (Reuters) - Canada's annual inflation rate edged down in August to 1.1 percent from 1.3 percent in July, as expected, ensuring there is no pressure on the Bank of Canada to raise interest rates any time soon.

Higher shelter costs, particularly rent and natural gas, were the main driver of inflation in the 12-month period, Statistics Canada said on Friday.

The inflation rate last touched the Bank of Canada's 2 percent target in May 2012.

The bank has kept its benchmark interest rate on hold at 1.0 percent since September 2010 and says it will continue to do so as long as inflation is muted, the economy has significant slack and household debt continues to improve.   Continued...