THE CHILD BENEFIT EFFECT SHOULD BE KICKING IN.

it’s not going show up anywhere.”

The annual inflation rate rose to 1.3 per cent in September, shy of forecasts for an increase to 1.5 per cent, as food prices saw their smallest gain since 2000.

Economists said the disappointing figures were likely to keep talk of a rate cut alive. The central bank left interest rates at 0.5 per cent earlier this week, but downgraded its economic outlook and said it had considered cutting for the second time in three years.

Avery Shenfeld, chief economist at CIBC Capital Markets, said the door for a rate cut that the central bank had opened got a tad wider with the day’s data, though he noted it would take more data for the bank to move off the sidelines.

The Canadian dollar weakened to a one-week low against the greenback following the data.

Retail sales declined in seven of 11 sectors in August, accounting for 57 per cent of retail trade, led by lower sales of new and used cars and a decline in purchases at general merchandise stores.

Annual core inflation, which strips out volatile items and is watched by the central bank, held at 1.8 per cent in September, as expected.

Food prices rose 0.1 per cent from a year ago, marking the smallest annual gain since February 2000. The cost of fresh vegetables fell for the first time since January 2013.