Economists said despite the sharp jump in Canada’s consumer price index Tuesday, they don’t expect significant changes in short-term interest rates any time soon. But they don’t rule out a rate hike in September.

CPI jumped a whopping 0.9% in May, bumping the year-over-year inflation rate to 2.5% from 1.6% in April, but almost all of the increase was due to gasoline prices; the core CPI was much more restrained and in line with economists’ expectations at 0.2% month-over-month increase and 1.5% hike year-over-year.

“Despite the shock value of the massive headline number, the fact that core inflation was right in line with expectations (and the U.S. rise in the month) should dampen the market impact from this result,” said BMO Nesbitt Burns Inc. chief economist Sherry Cooper.

Economists noted that gasoline prices jumped 13.6% month-over-month, but there were few other major sources of upward pressure in the month. Hotel bills rose 7.9% from April, but actually lower than the normal 10% rise for May, Cooper said. Airfares rose 5.7%, partly due to the run-up in fuel charges. Otherwise, there is little evidence that the surge in energy costs is feeding into other prices.

“The Bank of Canada has been warning for weeks that headline inflation would be higher than they earlier expected, due to surging energy costs, Cooper said in a report. “However, the issue for policymakers is whether that translates into a broader outbreak of inflation – and there is little sign of that here.

“However, core inflation remains slightly above what the Bank was calling for in Q2 (1.4% in the April MPR), so this latest mild reading on core by no means rules out rate hikes later this year.”

Warren Lovely, economist at CIBC World Markets, noted that the Bank’s April policy report forecast 1.7% average inflation in the second quarter of this year —a call that now looks nearly half a point too low. “The damage from energy to total CPI has been substantial, but the worst is now behind us,” he said in a report. “More important, there appears to be little risk of collateral damage to core inflation. On that score, the economy’s excess slack should delay core inflation’s return to the bank’s 2% target until late next year.

For the markets, Lovely said there is little in Tuesday’s CPI report to promote a sense of urgency at Canada’s central bank, “with September still the likely timeframe for a move higher in rates.”

Derek Holt, assistant chief economist at RBC Financial Group, said the report bodes well for short-term borrowing costs likely through to at least year’s end. But it may not help the Canadian dollar “since the probability attached to narrowing Canada-U.S. interest rate differentials as the Fed moves towards tightening and the Bank of Canada stands pat has just increased further.”

“A recently rising probability of narrowing Canada-U.S. spreads and a likely weakened pace of commodity price increases during the next one to two years mean that bets for an appreciating Canadian dollar hinge on the uncertain dynamics of the twin U.S. fiscal and current account deficits in the context of recently strong productivity growth.”

The central bank’s next scheduled meeting to set rates is July 20.