Rising Inflation Rates in Canada: Impact on Consumer Prices and Mortgage Interest Rates

2023-08-15 12:36:57

(OTTAWA) The inflation rate rose year over year last month in Canada, having been measured at 3.3% compared to 2.8% in June.

Posted 8:36 a.m. Updated 8:39 a.m.

Statistics Canada attributes the rise in the Consumer Price Index (CPI) mainly to a year-on-year effect linked to gasoline prices, a sharp monthly drop observed in July 2022 no longer being taken into account in the variation over 12 months.

Excluding gasoline, the CPI rose 4.1%, up slightly from a 4% advance in June.

Statistics Canada observed that gasoline prices fell 12.9% year over year in July, following a 21.6% drop in June.

Price growth in grocery stores slowed year over year; prices rose 8.5% in July following rising 9.1% the previous month. The slowdown was mainly due to fresh fruit prices and, to a lesser extent, bakery prices.

Statistics Canada reports that the Mortgage Interest Cost Index posted another record year-over-year increase of 30.6% and remained the main factor behind the increase in headline inflation.

The Bank of Canada expects inflation to hover around 3% over the next year in the country, before declining steadily to 2% by mid-2025. The central bank will make its next decision on the key rate on September 6.

The inflation rate rose year over year last month by 3.9% in Quebec, 3.4% in Nova Scotia, 2.9% in New Brunswick and 2.1 % in Prince Edward Island.

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