Annual inflation rate jumped to 3.0% in July, highest reading since 2011

Canada's consumer price index grew at its fastest pace since 2011 in June

However, investors shouldn't put too much stock in the July number because it was caused in part by the way Statistics Canada keeps track of the air transportation index, said Petursson.

Canada's inflation rate rose to its highest level since 2011 last month, as higher prices for airplane tickets, tourism and gasoline pushed the rate to three per cent.

Economists were expecting a year-over-year of 2.5%, same as in June, but July's number exceeded that, according to Statistics Canada.

CIBC economist Andrew Grantham told the Canadian Press that Friday's reading "at least modestly" increases the odds of a September interest hike.

"As such, while today's figures will likely support the C$ and result in increased speculation that the Bank could hike again as early as September, we continue to lean toward October for the next move", he said.

The Canadian dollar rose more than half a cent to 76.50 United States cents after the latest inflation report was released.

More news: US welcomes Saudi Arabia's pledge of $100 million for Syria

A 25.4 per cent increase in the price of gasoline and a 28.2 per cent increase in the cost of air transportation compared with a year ago helped push overall prices higher.

All eight components that the data agency tracks to come up with the rate were higher, and the inflation rate also rose in every single province.

Restaurant food has risen by 4.4 per cent in the past year, and mortgage interest costs are up by 5.2 per cent.

The Canadian dollar gained against its USA counterpart on Friday after the country's annual inflation rate accelerated by more than expected, increasing prospects that the Bank of Canada might raise interest rates next month.

BMO strategist and expert Benjamin Reitzes also noted in his Friday report that core inflation remained at 2% and that one month does not make a trend.

On the flip side, natural gas prices have declined by 5.7 per cent in the past year, and the price of telephone services has declined by 5.1 per cent.

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