Temur Durrani

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Canada’s inflation rate is inching towards the fastest pace since 2003. But the new numbers released Wednesday aren’t exactly surprising economists — many of whom are calling it a “transitory” influx of pressures.

The consumer price index rose 4.1 per cent in August from the same time last year, which is up from 3.7 per cent this past July, according to Statistics Canada. That makes it the highest margins since March of 2003, when the index was 4.2 per cent.

Wednesday’s figures, which come days away from the end of a tight election battle in Canada, are higher than the consensus prediction of a 3.9 per cent surge. Much of this is being attributed to supply-chain disruptions, pressured profit margins, a rising shelter index and soaring gasoline prices.

Here’s how Canadian economists are reacting:

Stephen Brown, senior Canada economist, Capital Economics

Inflation once again rose by more than expected last month but, with the gain mainly reflecting sharp price increases in a handful of components, the Bank of Canada will remain comfortable with its view that this spike in inflation is transitory.

James Marple, senior economist, TD Economics

Canadian inflation isn't quite as high as its American counterpart, but will likely remain elevated over the remainder of this year. Supply constraints will continue to put upward pressure on usually benign goods prices, while a normalization in categories impacted by the pandemic will also add to the headline.

The Bank of Canada will pay attention to inflation pressures and continue to message the gradual withdrawal of monetary support over the next year.

Royce Mendes, executive director for economics, CIBC Capital Markets

Canadian inflation climbed even higher in August, but the point reached might represent the peak of the mountain...  Some of the increase in the headline number just reflects base effects from a weak print a year ago falling out of the calculation.

Moreover, unlike the U.S., which was already experiencing the headwinds caused by the Delta variant, Canada was still reopening in August. As a result, prices for a number of services that were made available again continued to increase and make up ground lost last year.

Sal Guatieri, senior economist, BMO Capital Markets

I think because home prices have risen so quickly, now pushing more people into the rental market, we will see further upward pressure on rents through this year... That could keep the shelter component of CPI rising at a good clip and putting general upward pressure on inflation.

Claire Fan, economist, RBC Economics

The recovery in household demand for spending on services is still expected to drive more price growth in Canada into next year. In the meantime, supply chain issues, particularly the semi-conductor shortage that has limited auto production, will put a floor under price growth in the near-term but risk elongating some of these transitory price increases.