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Many economists, however, expected inflation to come in slightly higher at two per cent in August. 

The cooler-than-predicted inflation numbers landed a day before the Bank of Canada’s scheduled interest rate announcement. Early reactions by some economists indicate they are continuing to bet that the bank will cut the rate on Wednesday morning. 

As of last week, by 25 basis points, bringing it to 2.5 per cent from its current 2.75 per cent. 

“The Bank of Canada should have room to cut at its meeting tomorrow,” said TD economist Andrew Hencic, in a note to clients on Tuesday.

“The economy continues to show signs of waning momentum as the unemployment rate ticks higher and job losses accumulate. Moreover, the termination of many retaliatory tariffs will help provide some offset to price pressures.” 

Douglas Porter, economist at BMO, said that higher inflation in August shouldn’t “cause the Bank of Canada much stress,” adding that the central bank is on track for a cut.  

StatCan said lower costs of travel tours and fresh fruit last month helped to keep inflation from rising more. Cheaper prices for travel tours were due, in part, to lower demand for destinations in the U.S., according to the agency. 

Prices at the pump continued to decline, but at a slower pace than in July. 

At the same time, prices for meat grew at a faster pace, rising 7.2 per cent in August versus 4.7 per cent in July. 

Prices for clothing and footwear also went up. 

This is a developing story.