(Photo: The Canadian Press)
Ottawa — Canada’s year-over-year inflation rate slowed to 7.6 per cent in July, with the loosening largely attributable to lower gasoline prices.
This is a decrease from June, when the Consumer Price Index (CPI) rose 8.1% year-over-year, but economists expected inflation to have risen slowed down since.
July saw the lowest monthly gains since December 2021, Statistics Canada said Tuesday.
The month also marks the first drop in the headline inflation rate since June 2020.
The federal agency said gasoline prices rose 35.6% in July from the same month a year earlier, compared to June’s huge 54.6% gain.
The downward pressure on prices at the pump was due to a combination of factors, including continued concerns over a slowing global economy, increased COVID-19-related public health restrictions in China, and the slowdown in gasoline demand in the United States, according to Statistics Canada.
As gasoline prices fell, grocery store food prices rose at the fastest rate since August 1981, with prices up 9.9% year-over-year, compared to 9.4% the last month.
Despite lower gas prices, the “ubiquity” of inflation in the economy means there’s still some way to go before the strain on Canadians’ finances eases significantly, says Tu Nguyen, economist at the accounting and consulting firm RSM Canada.
“It will be some time before households can breathe a sigh of relief. Wage growth continues to lag inflation, resulting in a loss of purchasing power for households,” Ms Nguyen added in a note.
The average hourly wage is up 5.2% in July compared to a year ago.
Baked goods rose 13.6% from last year on rising input costs as Russia’s invasion of Ukraine continues to put upward pressure on wheat prices . Prices for other food items also rose faster, including eggs, up 15.8%, and fresh fruit, up 11.7% from last year.
As mortgage costs rise with rising interest rates, the report notes that rental prices are accelerating, rising faster in July than the previous month.
As more Canadians travel during the peak summer season, airfares rose regarding 25% in July compared to the previous month. Prices for traveler accommodation are up almost 50% over the past year, with the biggest price increases in Ontario.
Year over year, price growth in July was lower than that recorded in June in eight of Canada’s ten provinces. In Quebec, the CPI rose in one year by 7.3% in July, compared to 8.0% in New Brunswick, 8.7% in Nova Scotia and 9.5% in Île-du- Prince Edward.
As countries around the world battle soaring prices, there are signs that inflation is starting to ease, with the United States also seeing its inflation rate drop in July.
Yet inflation is well above the Bank of Canada’s 2% target.
The central bank is monitoring this latest reading of inflation as it prepares to set its next key interest rate on September 7, when it is expected to raise borrowing rates once more.
