Consumer price index up 1.3 per cent

Statistics Canada’s consumer price index shows Canada’s inflation rate rose to 1.3 per cent in July, led by increases in food prices.

According to Statistics Canada, prices were up in seven of the eight major components on a year-over-year bases in July; this increase in overall costs was led primarily by higher food prices. In June, annual CPI advanced 1%.

Indeed, the Bank of Canada has shifted its focus to what it calls “underlying inflation” – an effectively unobservable series which removes special factors, such as exchange rate effects, from core inflation.

The drop in inflation expectations came ahead of the 2 p.m. (1800 GMT) release of the minutes of the Fed’s July policy meeting as traders awaited clues on whether the U.S. central bank would raise interest rates by year-end.

The Journal, meanwhile, noted that economists are concerned the slow increase in consumer prices will impact wage growth and affect the ability of people and businesses to improve their finances.

The largest downward impact was brought about by the Transport and Communication Index (0.38 percentage points).

“It is still likely the case that the next move by the Bank of Canada will be more influenced by near-term economic growth”, Ferley said.

Prices for food bought from stores was up 3.5 per cent, while food bought in restaurants was up 2.7 per cent. Core Inflation m/m +0.0% +0.0%!Headline: +1.3%!

“The declines were largely the result of gasoline prices, which were 12.2% lower than 12 months ago”, TD Economics’ Brian DePratto said in a note to investors.

Prices in Northern Ireland saw the biggest increase over the year, rising 9.0 per cent while in England prices were 6.1 per cent up.