Highest inflation rate was in Saskatchewan, StatsCan says

Core Inflation m/m +0.0% +0.0%!Headline: +1.3%!

Economists had expected an increase of 1.4 per cent, up from 1.0 per cent in June, according to Thomson Reuters.

Canada’s all-items consumer-price index increased 1.3% in July from a year earlier, Statistics Canada said Friday, matching market expectations.

The transportation component dropped 1.7 per cent compared with a year ago as the gasoline index fell 12.2 per cent. Offsetting some of the drop in gasoline prices was a 2.5 per cent increase in the cost of passenger vehicles.

Thanks to Canada’s 1.3 per cent inflation bump since last July, with a one per cent increase in June alone, the cost of putting food on the table is becoming virtually unaffordable.

Other costs such as the price of clothing and footwear, particularly for women, also experienced an increased inflation rate.

“Whilst it is true that the wage rises and low inflation has put more money in consumers’ pockets, we are still only able to spend, and consume, so much, particularly in the clothing sector”.

“It is not inconsistent with the view that we’re sort of through the worst of that (first half) contraction”. Saskatchewan led the pack, with prices rising 1.9% in July, followed by Ontario (1.5%) and Alberta (1.3%).

Inflation has traditionally been more important for monetary policy, with core inflation considered a “guide” to the future level of inflation.

But the 2.4% rate is unlikely to prevent a further easing should the BOC deem it necessary, given that the underlying trend is below the 2.0% mid-range target in its view.

“The Bank of Canada appears to be in a “sweet spot” presently, with the July interest rate cut providing the needed boost to the growth outlook”.