Canada's August inflation holds steady at 3.0%

• The previous month's rate was also 3.0%
• CPY fell 0.1% on a monthly basis, compared with an expected flat reading
• Bank of Canada core inflation stood at 2.4% year-on-year, slightly above the 2.3% forecast
• On a monthly basis, BOC core rose 0.1%, below the 0.2% estimate
• The CPI median remained at 2.0%, in line with expectations and unchanged from the prior
• CPI trim was 1.9%, matching the forecast and the previous month
• CPI common came in at 2.6%, down from 2.7% previously

The data broadly matched expectations, though slightly weaker on the margins. A key concern is the significant rise in gasoline prices in September, which occurred even with a 10 cent per litre federal gasoline tax holiday that has been extended through the end of the year.

The Canadian dollar declined after the release as traders lowered the odds of a Bank of Canada rate hike in October. Before the report, the probability was 58%, and it has edged lower in light trading conditions.

Separately, July manufacturing sales were softer than expected, coming in at -0.4% versus a forecast of -0.2%. Part of that weakness was due to revisions that lifted June's figure to +0.3% from an initial +0.1%.