Canada’s y/y inflation slowed to 7.6% in July, largely due to lower gas prices.
Inflation hit a 40-year high of 8.1% in June, but economists had widely expected inflation to moderate thereafter.
Statistics Canada said in its latest Consumer Price Index report that July price increases were the smallest monthly increase since December 2021.
It also marks the slowest year-on-year inflation rate since June 2020.
Gas prices rose 35.6% in July from 54.6% in June, according to a federal agency.
“Continued concerns related to the slowdown in the global economy, as well as increased COVID-19 pandemic public health restrictions in China and a slowdown in gasoline demand in the United States, have led to lower global demand for crude oil, pushing prices at the pump down. was under downward pressure,” the report said.
But while gas prices fell, grocery store food prices rose at their fastest pace since August 1981, up 9.9% year-on-year compared to 9.4% the previous month.
Bakery goods are up 13.6% from last year amid rising input costs as Russia’s invasion of Ukraine continues to put upward pressure on wheat prices. Other food prices also surged, including eggs, which rose 15.8% from last year, and fresh fruit, which rose 11.7%.
As mortgage costs rise as interest rates rise, the report notes that rent prices are accelerating, rising faster in July than the previous month.
Airfares increased about 25% in July compared to the previous month as more Canadians traveled during the busy summer season. Prices for traveler accommodation have risen nearly 50% from a year ago, the biggest increase in Ontario.
There are some signs that inflation is starting to ease as countries around the world struggle with price spikes, and the United States also saw inflation ease in July.
Still, inflation remains well above the Bank of Canada’s 2% target.
The central bank is keeping an eye on the latest inflation rate as it prepares to set its next key rate on Sept. 7 when it is expected to raise borrowing rates again.
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