Canada Inflation Rate Highest since 2011

The inflation rate in Canada increased to 3 percent in July of 2018 from 2.5 percent in June, above market expectations of 2.5 percent. It is the highest inflation rate since September of 2011, boosted by rising prices for gasoline, fuel, air transportation and travel tours.
Statistics Canada | Joana Taborda | 8/17/2018 12:58:36 PM
Year-on-year, all eight major components rose, with transportation (+8.1 percent compared to 6.6 percent in June) making the largest contribution. 

Energy costs were 14.2 percent higher compared with July 2017, after increasing 12.4 percent in June. Consumer prices for gasoline (+25.4 percent) and fuel oil and other fuels (+28.1 percent) continued to rise, amid higher global prices for crude oil following recent supply disruptions.

In addition to gasoline, the purchase of passenger vehicles index rose more in July (+2 percent) than it did in June (+1.8 percent). Prices for passenger vehicle insurance premiums were 3.5 percent higher, following rate increases in several provinces.

Year-over-year gains in the price of services were higher in July (+3.2 percent) than in June (+2.2 percent). Recent interest rate increases continued to impact the mortgage interest cost index, which rose 5.2 percent in the 12 months to July.

Additional upward pressure came from cost of shelter (2.4 percent compared to 2 percent); household operations, furnishings and equipment (0.7 percent compared to -0.1 percent); recreation, education and reading (1.8 percent compared to 0.6 percent); while food inflation was flat at 1.4 percent and prices slowed for clothing and footwear (0.5 percent compared to 1.8 percent); health and personal care (1.1 percent compared to 1.5 percent); and alcoholic beverages and tobacco products (4.5 percent compared to 4.8 percent).

On a seasonally adjusted monthly basis, the CPI rose 0.5 percent in July, higher than 0.1 percent in June and above forecasts of 0.1 percent. Month-over-month increases in the air transportation index (+16.4 percent) and the travel tours index (+13.9 percent) reflected higher prices during peak travel season. Prices for telephone services increased 2.2 percent on a month-over-month basis following declines in May and June, when a series of industry-wide price promotions took place. 

The BoC's annual core inflation, which excludes volatile items, went up to 1.6 percent from 1.3 percent in June and higher than market expectations of 1.3 percent.

Canada Inflation Rate Highest since 2011