Consumer price index unexpectedly lower in July

Canadians paid less for clothing, gasoline and natural gas
|labour-reporter.com|Last Updated: 08/17/2012

Canadian inflation was tamer than expected in July, propelled by a drop in energy and fuel prices.

Annual inflation rose to 1.3 per cent in the past 12 months, following a 1.5 per cent gain in June, though analysts had expected overall consumer price index (CPI) inflation and core inflation to remain unchanged from June. Higher prices for passenger vehicles, meat, restaurant meals and electricity contributed to the CPI for July.

But consumers paid less for clothing and fuels such as gasoline and natural gas in July compared with a year earlier, Statistics Canada reported on Aug. 17.

On a seasonally adjusted monthly basis, the CPI fell 0.1 per cent in July versus a 0.2 per cent decline in June.

The underlying core inflation rate, which excludes gasoline and seven other volatile items, decreased to 1.7 per cent from two per cent. These items were also 0.1 per cent cheaper on a monthly basis.

Food prices rose 2.1 per cent compared to July of last year, along with transportation (up 1.1 per cent) and shelter costs (up one per cent).

The cost of energy decreased 1.2 per cent over the past 12 months, after declining 0.8 per cent in June.

Bank of Canada Governor Mark Carney has mentioned hiking rates from their current rate of one per cent since April, but markets are betting he could wait up to a year before making a move.

In the United States, the CPI remained unchanged in July, though the money supply has been on the uptick for a while. Overall, consumer prices rose 1.4 per cent year on year. Core inflation, excluding food and energy, was up 0.1 per cent.

— With files from Reuters

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