With current industrial product and raw materials prices more or less in line with expectations, inflation is not a big economic concern.

Industrial prices were unchanged in August. If energy prices were excluded, industrial prices would have dropped 0.2%, while raw materials prices would have declined 1.7%.

“Canadian industrial prices were broadly in line with expectations in August,” says BMO Nesbitt Burns, “while raw materials prices were weaker-than-expected, with rising energy prices preventing an even larger decline.”

“The short-term trends of many components of industrial prices suggest that there is little inflation in the pipeline. Even though energy prices rose last month, they have been leading producer prices lower over the last few months. On top of this, costs in several other components have been easing,” says BMO. “With a global slowdown now firmly taking hold, there is little reason to doubt that consumer inflation, both overall and core, will also drop back over the coming months.”