Canada Inflation Rate Down to 2.8%

The inflation rate in Canada fell to 2.8 percent in August of 2018 from 3 percent in July, which was the highest inflation rate since September of 2011. Figures came in line with market expectations amid a slowdown in cost of gasoline, utilities and shelter.
Statistics Canada | Joana Taborda | 9/21/2018 12:54:14 PM
Year-on-year, all eight major components rose, with transportation (7.2 percent compared to 8.1 percent in July) making the largest contribution.

Prices for non-durable goods (3.8 percent) increased at a more moderate pace in August than in July (4.4 percent). Prices slowed for gasoline (19.9 percent compared to 25.4 percent in July) and water, fuel and electricity (2.2 percent compared to 3 percent).

Cost also rose less for shelter (2.3 percent compared to 2.4 percent) and services (3.1 percent compared to 3.2 percent). Month-over-month decreases in the cost of travel tours and air transportation, which reflect the winding down of the summer travel season, were larger in August 2018 than in August 2017. This was attributable to smaller seasonal increases in July 2017 during celebrations related to Canada's 150th birthday.

On the other hand, prices rose faster for durable goods (1.1 percent compared to 0.8 percent), namely the purchase of passenger vehicles (2.3 percent compared to 2 percent). The gain was largely attributable to the greater availability of 2019 model-year vehicles compared with the same month last year. Additional upward pressure came from cost of household operations, furnishings and equipment (0.8 percent compared to 0.7 percent); recreation, education and reading (1.9 percent compared to 1.8 percent); food (1.6 percent compared to 1.4 percent); health and personal care (1.4 percent compared to 1.1 percent); and alcoholic beverages and tobacco products (4.6 percent compared to 4.5 percent). Inflation for clothing and footwear was flat at 0.5 percent.

On a seasonally adjusted monthly basis, the CPI rose 0.1 percent in August, following a 0.5 percent increase in July. Seven of eight major components increased, while the clothing and footwear index was unchanged.

The BoC's annual core inflation, which excludes volatile items, went up to 1.7 percent from 1.6 percent in July and higher than market expectations of 1.3 percent.

Canada Inflation Rate Down to 2.8%