OTTAWA: Canada’s inflation rate rose to 3.3 percent in July after plunging over the past year from a June 2022 peak, the government statistical agency said Tuesday.
A rise in headline inflation – which analysts had expected to be lower following a 2.8 percent increase in prices in June – was mainly attributed by Statistics Canada to a base year effect on gasoline prices.
“A large monthly decline (in prices at the pump) in July 2022 is no longer impacting the 12-month movement (of the Consumer Price Index),” the agency explained.
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Also pushing up inflation last month was a spike in energy prices in Alberta after provincial rebates and a price cap were phased out, it said.
Mortgage interest costs, up 30.6 percent, also posted another record year-over-year gain, while travel costs increased at a slower pace with the cost of hotel accommodations up but airfare and prices for travel tours down.
The cost of groceries also remained elevated, but rose less than in previous months.
Desjardins analyst Tiago Figueiredo commented that inflation in July “may have come in hotter than expected, but under the hood there are still signs of progress.”
“Today’s report might nudge the balance of risks slightly to the upside as far as the odds of a September rate hike are concerned,” he said in a research note. “However, weaker signs in GDP and jobs data recently will also factor into the analysis.”
“Barring any major surprise in the upcoming activity data,” Figueiredo predicted the Bank of Canada would hold its key lending rate steady at 5.0 percent at its next meeting in early September.
CIBC’s Katherine Judge, however, forecast another 25 basis point bump in the central bank’s interest rate next month.
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