October 19, 2018 / 12:40 PM / a year ago

UPDATE 1-Canadian annual inflation rate posts big drop, down to 2.2 pct

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OTTAWA, Oct 19 (Reuters) - Canada’s annual inflation rate dropped sharply in September, falling to 2.2 percent from 2.8 percent in August as transitory price pressures from gasoline and air travel eased, Statistics Canada said on Friday.

The rate was well below the 2.7 percent predicted by analysts in a Reuters poll. September marked the eighth consecutive month it has exceeded the Bank of Canada’s 2.0 percent target.

The central bank, which has consistently said inflation will move back down toward 2 percent by early 2019, is due to announce its next interest rate decision on Oct. 24 and markets expect another hike.

Statscan’s data showed that gasoline prices increased by 12.0 percent over September 2017, down from the 19.9 percent year-over-year jump in August. The cost of air transportation fell by 16.6 percent from a year earlier.

The central bank’s three core inflation measures all fell for the first time since November 2016. CPI common, which the bank says is the best gauge of the economy’s underperformance, dipped to 1.9 percent from 2.0 percent in August.

Reporting by David Ljunggren; Editing by Jeffrey Benkoe

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