The Bank of Canada’s business outlook and consumer surveys will help gauge Canadians’ outlook for inflation and spending. Photo by HYUNGCHEOL PARK/Postmedia

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Two key economic data releases Monday could make or break the case for a Bank of Canada interest-rate hike later this month.

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Statistics Canada will release September inflation data at 8:30 a.m. Ottawa time, and the central bank will publish its latest business and consumer outlook surveys shortly after. They will be the final major clues to how the economy is weathering oil-driven inflation risks and the fallout from escalating trade tensions before policymakers make their next rate decision on Oct. 28.

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Officials have held the benchmark rate steady at 2.25 per cent for the past seven decisions. But policymakers have signalled they’re worried that the longer gasoline prices remain elevated, the more likely firms will raise prices on other goods and services.

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Dovish forecasters are pointing to September labour data, which showed job losses and a rising unemployment rate. But that might not be enough to keep policymakers from raising rates if Monday’s data releases show persistent price pressures and a steadying economy.

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“If you get a hot inflation print and the business outlook survey is strong, then an October hike is on the table, even with the weak jobs number,” Benjamin Reitzes, a Canadian rates and macro strategist with the Bank of Montreal, said in an interview.

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The latest inflation data will be especially crucial to the bank’s decision. The headline yearly change in the consumer price index has held near three per cent for months, which governor Tiff Macklem has called “too high.” Annual core inflation metrics are close to the bank’s two per cent target, though the more recent trend in price pressures has accelerated.

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The big question is whether inflation is at risk of flaring up further.

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Robert Both, a macro strategist at TD Securities, said he’ll pay particularly close attention to monthly changes in the bank’s trim and median core measures and the share of CPI components rising at three per cent or more.

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“I’d be concerned if we were seeing more inflation coming through core goods,” he said, describing products other than food and energy, like clothes and furniture.

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The bank’s business outlook and consumer surveys will help gauge Canadians’ outlook for inflation and spending.

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If they show evidence that firms and households are resilient, despite slower immigration and the tariff war with the United States, it would ease worries about growth. If firms plan to pull back on hiring and investment spending, however, it could give the bank pause and suggest that the second quarter economic rebound growth won’t last, said Taylor Schleich, director of economics and strategy at National Bank of Canada.

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“They seem to be pretty confident that businesses have adapted,” he said. “We’ll see.”