Ottawa’s annual inflation rate hit 3.2 per cent in July, pushing past already-surging national figures, according to Statistics Canada.
The federal agency said Friday that the consumer price index for July was up 3.0 per cent in Canada on a year-over-year basis, up from a 2.5 per cent increase the month before. Ottawa’s rate increase was in line with the national average in June.
Prices in Ottawa also rose at a faster rate than the rest of Ontario, which saw a 3.1 per cent annual inflation rate last month.
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Statistics Canada cautioned that municipal figures may have fluctuated widely because they are based on small samples.
Higher gasoline prices helped push the country’s annual inflation rate in July to its highest reading since September 2011, it added.
Economists had expected a year-over-year inflation rate of 2.5 per cent, according to Thomson Reuters Eikon.
The result put inflation at the upper end of the Bank of Canada’s target range of one to three per cent.
Earlier this summer, the Bank of Canada predicted inflation to move as high as 2.5 per cent – due to temporary factors like higher gas prices – before it settles back down to two per cent late next year.
The Bank of Canada can use interest rate hikes as a tool to help prevent inflation from climbing too high. The central bank raised its trend-setting interest rate to 1.5 per cent earlier this summer.
The Canadian dollar rose more than half a cent to 76.50 US cents after the latest inflation report was released.
The average of Canada’s three measures of core inflation, which leave out more-volatile data like pump prices and are closely watched by the central bank, rose last month to 2.0 per cent compared with 1.96 per cent in June.
All eight major components of the consumer price index rose on a year-over-year basis in July with the transportation index being the largest contributor with an 8.1 per cent increase.
A 25.4 per cent increase in the price of gasoline and a 28.2 per cent increase in the cost of air transportation compared with a year ago helped push overall prices higher.
Food purchased from restaurants also gained 4.4 per cent, while mortgage interest costs rose 5.2 per cent.
On the flip side, telephone service costs were down 5.1 per cent and traveller accommodations slipped 4.1 per cent compared with a year ago.
– With files from OBJ staff
