Annual price growth is ticking back upwards again
Canada’s inflation rate increased to 3.3% in July in a sign that much work may still remain for the central bank to restore the consumer price index to its target range.
New figures released by Statistics Canada on Tuesday morning showed that annual price growth rose last month after hitting 2.8% in June, with a smaller year-over-year decline in gasoline prices partly responsible for that uptick.
July’s CPI report means the inflation rate has now inched above the Bank of Canada’s target range of 1-3%, with grocery prices still increasing markedly – by 8.5% on an annual basis – despite slowing compared with June.
With energy prices excluded, the consumer price index rose at an annual rate of 4.2%, in July, down from 4.4% the previous month.
Unsurprisingly, mortgage interest costs contributed heavily to the higher inflation rate, jumping by a record 30.6% on a yearly basis as the weight of Bank of Canada rate hikes continues to take a toll.
The July inflation figures were higher than most analysts had expected, with RBC envisaging a 2.9% annual increase and BMO and CIBC both predicting an annual jump of 3.1%.
Much attention will now turn to the Bank of Canada’s next move, set to take place on September 6, with inflation remaining resilient despite its series of rate hikes over the past 16 months.
That aggressive campaign has seen the central bank increase its trendsetting interest rate by a full 475 basis points, from a rock-bottom 0.25% to a 22-year high of 5%, as part of a war on rampant inflation.
