Thorunn Howatt
Northern News Services

Yellowknife (Sep 25/02) - Yellowknifers are paying for their sins.

The city's annual inflation was steady at 3.2 per cent in August as higher tobacco and alcohol prices made their presence felt. Transportation and fuel also cost more.

Yellowknife's inflation rate is higher than the rest of the country's 2.6 per cent rate over the same time last year. In July, NWT Statistics reported prices rose 3.2 per cent over the same time last year.

The city's inflation rate is one of the highest in the country but still lags behind Atlantic Canada. Inflation was 4.2 per cent in New Brunswick during August. In Nova Scotia, prices rose 3.6 per cent.

Following the inflation trend, interest rates are also edging up.

The Bank of Canada will likely try to cool the country's boiling economy by pushing up its interest rate.

Bank of Canada governor David Dodge said as much last week.

"It remains the bank's view that as the Canadian economy continues to expand and to approach capacity, further timely and measured reductions in the amount of monetary stimulus will be necessary," said Dodge.

The central bank has raised its rate three times this year by one-quarter of a percentage point each time. The last time was in July.

When the Bank of Canada rate goes up, commercial bank rates and mortgages usually follow.