Canada annual inflation rises in September on gasoline, food costs

FILE PHOTO: An Esso gas pump displays the price of fuel at 91.9 cents CAD ($0.72) per litre in Richmond Hill, Ontario, January 30, 2015. REUTERS/Mark Blinch

OTTAWA (Reuters) - Canada’s annual inflation rate rose to the highest in five months in September on higher prices for gasoline and food, moving closer to the central bank’s target, data from Statistics Canada showed on Friday.

The annual inflation rate rose to 1.6 percent last month from 1.4 percent in August, the highest since April and matching economists’ forecasts.

Underlying measures of inflation watched by the Bank of Canada also firmed, with CPI trim, which excludes upside and downside outliers, rising to 1.5 percent.

CPI median, which shows the median inflation rate across CPI components, held at 1.8 percent after the previous month was revised higher, while CPI common, which the central bank says is the best gauge of the economy’s underperformance, was unchanged at 1.5 percent.

The Bank of Canada, which is largely expected to hold interest rates at 1 percent next week after two back-to-back increases, has an inflation target of 2 percent.

Overall, prices were up in six of the eight major components of the consumer price index, led by a 3.8 percent annual increase in transportation costs. That was driven by higher gasoline prices amid supply disruptions due to Hurricane Harvey.

Food prices rose 1.4 percent, partly due to some of last year’s dampening effects starting to wear off. Higher shelter costs also boosted inflation, with prices up 1.4 percent.

Reporting by Leah Schnurr; Editing by Chizu Nomiyama