Canadian retail sales surprise again, rising above expectations in June

Both reports also said inflation has been weighed down by easing gasoline prices, which have plummeted by more than a fifth from previous year, as crude oil costs continues to slide due to oversupply. The index for all food at home also finished higher, climbing 0.2%.

The twelve-month moving average rate was 0.72%.

“However, [the effect of lower energy prices overall] has moderated through the past three months, as the effects of past price movements work their way through the index”.

Elliott said July’s inflation numbers were affected by gasoline prices (down 15.3 per cent), beef prices (up 18.1 per cent), water bills (up 8.5 per cent), homeowners’ insurance (up 13.9 per cent), groceries (up four per cent) and clothing (up 3.5 per cent).

Sales in the food, beverage and tobacco subsector rose 1.2% to $10.8 billion in June, their seventh increase in eight months.

“We look for core to stay stuck above 2% well into the next year as the sagging Canadian dollar pressures plenty of other prices”, said Douglas Porter, chief economist, BMO Financial Group.

The drop in gas prompted an overall decline in Canada’s transportation sector with a 1.7 per cent annual decrease.

On a regional basis, sales were up across the board, rising for a second consecutive month in all provinces (except for Saskatchewan’s modest decline of 0.1% in May).

Economists said the reports had few implications for monetary policy, with the Bank of Canada looking through temporary inflation factors.

What has changed is the oil price drop fueling concerns over the ability of the Canadian economy to rebound in the second half of this year, as projected by the Bank of Canada.

The central bank cut its key interest rate by a quarter of a percentage point to 0.5 per cent last month and lowered its expectations for economic growth.