Inflation rate falls to 0.1% as price growth slows

The consumer price index for July rose 0.1% compared with a year ago, as gasoline prices fell nearly 15%, Statistics Canada said Wednesday.

The reading was down from a year-over-year increase of 0.7% in June. The average economist estimate had been for a year-over-year increase of 0.5% for July, according to financial data firm Refinitiv.

Excluding the drop in gasoline prices, the inflation barometer compared with a year ago was up 0.7% for July compared with a 1.2% increase excluding gasoline for June.

The statistics agency said the slower pace of price growth was broad-based, spanning goods and services.

Statistics Canada said air travel prices fell in July by 8.6%, the first year-over-year decline since December 2015.

It said the result was due to airlines offering incentives for people to travel again, including reduced fees, discounts and promotions even as many flights remained cancelled or suspended because of the pandemic.

Similarly, prices for traveller accommodations were down 27% compared with July 2019, marking the third straight month of declines as Canadians opted for staycations.

Annual prices for meat rose at a slower pace in July than June largely due to production ramping up again following plant closures caused by spikes in infection rates among workers.

The average of Canada’s three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 1.6%, staying relatively steady since April.

The figures are below the Bank of Canada’s 2% inflation target, but the central bank has warned that the price index readings are going to be low for this year and next.

Governor Tiff Macklem has said the central bank will maintain its key interest rate at the lower limit of 0.25% until inflation gets back into the Bank of Canada’s target range.

In a separate report, Statistics Canada said wholesale sales rose 18.5% in June to $62.1 billion to bring them near their pre-pandemic levels.

The agency said all seven subsectors saw higher sales for the first time since November 2017 as the motor vehicle and motor vehicle parts and accessories subsector led the growth in dollar terms.

Wholesale sales volumes were up 18.8%.

The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.