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Inflation Rate Rises To 1.9 Per Cent In September Up Two-Tenths Of A Point

Canada’s annual inflation rate rose two-tenths of a point to 1.9 per cent last month as the cost of energy and new cars jumped higher in September.

The increase in the annual rate, after a drop in August, had been expected given the recent run-up in oil prices.

Statistics Canada said without the energy component, which was 5.6 per cent higher last month, the annual inflation rate would have dipped to 1.5 per cent.

As well, the agency said it noticed a big pick-up in the price of passenger vehicles during the month — to five per cent from a 2.2 gain in August — as manufacturers shaved the level of incentives they were offering consumers.

On a month-to-month basis, overall prices rose 0.2 per cent from August.

Despite the increases, inflationary pressures remain subdued in Canada. The Bank of Canada’s core rate, which measures underlying price pressures by excluding volatile items such as energy, actually fell to 1.5 per cent in September from 1.6 per cent.

The current inflation rate is also absorbing the impact of the new harmonized sales tax in Ontario and British Columbia, which the central bank estimates is adding 0.7 percentage points to overall price levels.

Still, there was a general firming up of prices noticeable in September. The agency said prices rose in seven of the eight component groups it measures.

Aside from energy and automobiles, the main contributors to annual inflation were homeowner replacement costs, which rose 5.6 per cent; food, which advanced 2.1 per cent; transportation, up 3.1 per cent; and shelter costs, up 2.5 per cent.

Prices also rose on cigarettes (4.6 per cent), alcoholic beverages (2.4 per cent) and tuition (3.8 per cent).

The main contributors to lower inflation were shelter costs, which dipped 2.5 per cent, and clothing and footwear, which were 2.2 per cent less in September than last year.

Regionally, prices were higher in every province in Canada compared to last year, with Ontario’s 2.9 per cent rate still tops in the nation.