Canada's annual inflation rate slowed to 1.1 per cent in August, amid smaller increases for housing and gas prices than in the previous month, Statistics Canada said Friday.
The August annual inflation rate was in line with economist estimates and compared with an increase of 1.3 per cent in July.
Bank of Montreal senior economist Benjamin Reitzes said inflation remains very tame with no signs of a looming pick up.
``Persistent economic slack and lacklustre global growth will likely keep price pressures contained at least well into next year,'' Reitzes said.
``There's nothing here to push the Bank of Canada off the sidelines any time soon.''
The Bank of Canada's core inflation index rose 1.3 per cent for August compared with 1.4 per cent in July, at the low end of the central bank's target range of between one and three per cent.
Bank of Canada governor Stephen Poloz was upbeat about prospects for the Canadian economy earlier this week, but noted it should be able to support some growth without stoking inflation as business investment picks up.
The central bank has maintained its key rate at one per cent since September 2010.
Capital Economics economist David Madani was far more bearish about his outlook for the economy.
Madani said he expects growth in the third quarter to fall well short of the Bank of Canada's July forecast of 3.8 per cent.
``With economic growth likely to remain sluggish through the rest of this year and inflation expectations well anchored, it will be a long time before capacity or wage cost pressures ever threaten inflation above the bank's one per cent to three per cent target range,'' Madani said.
Statistics Canada said shelter costs in August were up 1.1 per cent from a year earlier as Canadians paid more for rent and natural gas, offset by lower mortgage interest costs compared with last year. The July increase was 1.3 per cent.
Rent prices were up 1.7 per cent year-over-year in August, while natural gas costs gained 9.5 per cent. Mortgage interest costs were down 3.6 per cent.
The price of gasoline was also higher, as was the cost of vehicles, however at a slower pace than in July.
Drivers paid 2.2 per cent more for gasoline while passenger vehicle prices were up 0.6 per cent for August. That compared with July's increases of 6.1 per cent and two per cent, respectively.
Overall, Statistics Canada said prices for seven of the eight components that it tracks were up from a year ago.