TORONTO (Reuters) - Canada’s annual inflation rate in July rose to 3.0 percent as prices in all eight major components increased year-over-year, Statistics Canada said on Friday.

Market reaction: CAD/

here

COMMENTARY

BRITTANY BAUMANN, MACRO STRATEGIST, GLOBAL STRATEGY, TD SECURITIES

“It did surprise our expectations as well. But as we’ve seen in prior months, it’s again due to one-offs...the underlying core measures are stable at 2 percent. So this is something that the Bank (of Canada) can look through, going forward. So overall, it doesn’t really change our view on the Bank of Canada. (It) certainly might lower the bar a little bit for a September hike. But our view is unchanged that they wait till October.”

SAL GUATIERI, SENIOR ECONOMIST, BMO CAPITAL MARKETS

“The headline certainly is a little bit higher than expected, higher gas prices are definitely feeding into that measure and there was some upward pressure on airfares and travel tours, as well as phone service charges.”

“For the most part, July inflation seems well behaved. The average core measure is still hovering at 2 percent, the bank’s target. There’s no clear sign that the underlying inflation is poised to drift higher.”

“I don’t think the inflation numbers move the dial for the Bank of Canada. I don’t think there’s any need to rush into the next rate move. We’re still sticking with a call that the bank will wait until October to pull the rate trigger again.”

PAUL FERLEY, ASSISTANT CHIEF ECONOMIST AT ROYAL BANK OF CANADA:

“A significant component (of the increase) was airfares, which were up quite a bit. Part of it is seasonal increases, and they were also passing through higher fuel costs.”

“Core measures, on average, are still staying at 2 percent, in terms of the Bank of Canada’s core measure. We’re not seeing as much pressure as we’re seeing in the overall index... But it still suggests an upward drift is occurring.”

“This certainly raises the probability of a move (upward) in September by the Bank of Canada, but there’s going to have to be further confirming evidence of strength in the economy and inflation pressure building. We’re still leaning toward an October hike.”

(This version of the story corrects first comment to change first name to Brittany from Rittany)