Canada’s inflation rate rose to 1.8 per cent last month due largely to the implementation of a harmonized sales tax in Ontario and B.C., and a two-point rate hike to the HST in Nova Scotia. Prices were up 2.9 per cent in Ontario and 2 per cent in B.C. Though the 1.8 per cent inflation rate was considerably higher than June’s rate of one per cent, it was lower than the 2.1 per cent rate economists had expected, which could give the Bank of Canada more leeway before it looks at raising interest rates. “While the HST made all the noise last month, the fact is that underlying inflation remains quite tranquil, neither threatening to dip into deflation terrain nor pushing above the [Bank of Canada’s annual] two per cent target.”
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