By Julie Gordon
OTTAWA (Reuters) -Canada's annual inflation rate accelerated to an 18-year-high in August, driven by broad upward price pressures, data showed on Wednesday, just days before a hotly contested federal election that could see Prime Minister Justin Trudeau's Liberals ousted.
The rate rose to 4.1% in August, its fastest clip since March 2003, Statistics Canada said, beating analyst estimates and prompting Trudeau's main rival to pounce over the rising cost of living.
"The numbers released today make it clear that under Justin Trudeau, Canadians are experiencing an affordability crisis," said Erin O'Toole, leader of the main opposition Conservatives, in a statement.
The Conservatives have a narrow lead https://reut.rs/2Xl5D30 over Trudeau's Liberals at 31.2% to 30.5% just days before the Sept. 20 vote, according to a new Nanos Research poll. The left-leaning New Democrats are in third at 21.4%.
Countries around the world are grappling with hot inflation amid supply chain hurdles and labor shortages as restrictions are eased and tightened with each new wave of the virus, leading to choppy demand and supply bottlenecks.
The Bank of Canada has said it expects headline inflation to remain above its 1%-3% control range this year, before easing back to the 2% target in 2022.
"This doesn't mean anything short-term for the Bank of Canada. They've been very insistent that the inflation shock is transitory," said Andrew Kelvin, chief Canada strategist at TD Securities.
In Canada, the hot inflation print was driven by high gasoline prices, rising housing costs and a surge in the prices of goods like furniture, appliances and vehicles, along with high travel-related costs as restrictions eased.
That was the opposite of the United States https://www.reuters.com/world/us/us-core-consumer-prices-slow-sharply-august-2021-09-14, where a harsh fourth wave has put a damper on travel.
"It is really the mirror opposite of what we saw in the U.S. yesterday, where we had the travel components showing signs of cooling. Here, they are showing signs of heating up," said Jimmy Jean, chief economist at Desjardins Group.
"It is still part of the reopening effect. In August we were still getting back to normal," Jean added.
Analysts polled by Reuters had expected the annual inflation rate to rise to 3.9% in August. At 4.1%, it was the highest since the 4.2% recorded in March 2003.
The three measures of core inflation all posted gains. CPI common, which the Bank of Canada calls the best gauge of the economy’s underperformance, edged up to 1.8% from 1.7% in July.
The Canadian dollar was trading 0.2% higher at 1.2663 to the greenback, or 78.97 U.S. cents.