Canada's annual inflation rate held unchanged at 2.2 percent in July and the core rate fell to 2.3 percent from 2.5 percent in June, a steady performance that analysts said makes an interest rate rise in September highly unlikely.
Statistics Canada said on Tuesday that lower energy prices countered the fact that a sales tax cut on July 1, 2006, dropped out of the annual inflation calculations. The tax cut had reduced inflation by an estimated 0.6 percentage points in July last year. Energy prices fell 1.7 percent from July 2006.
"At the very least you can say it will give the Bank of Canada a bit more comfort in standing on the sidelines in September as it waits out the financial market squalls," BMO Capital Markets deputy chief economist Doug Porter said of the July figures.
The central bank targets inflation at 2 percent and tries to keep it between 1 and 3 percent. In July it said overall and core inflation was higher than projected, but should decline to 2 percent by early 2009.
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