Canada's Inflation Rises in July


Consumer prices rose 1.8% in the 12 months to July, following a 1.0% increase in June. In July, consumer prices were affected by changes in consumption taxes in Nova Scotia, Ontario, and British Columbia.

Energy prices rose 7.9% between July 2009 and July 2010, following a 1.3% increase during the 12-month period to June. Excluding energy, the Consumer Price Index (CPI) was up 1.3% in July, after posting a 0.9% increase in June.

Within the energy price index, prices for electricity rose 9.8% in July compared with the same month a year earlier.

As well, gasoline prices were 4.8% higher in July than they were a year earlier. This followed a 2.9% decline in the 12 months to June.

Higher consumer prices were also recorded in July for homeowner's replacement costs (+5.5%), passenger vehicle insurance premiums (+5.1%), and prices for food purchased from restaurants (+2.8%).

On a seasonally adjusted monthly basis, consumer prices rose 0.6% in July, following a 0.2% decline in June. The alcoholic beverages and tobacco products index was up 1.7%, while the health and personal care index rose 1.0%. Also, the shelter index increased 0.8%.

Prices increased in seven of the eight major components of the CPI in the 12 months to July; the only exception was clothing and footwear.

Of the eight major Consumer Price Index components, seven register higher price increases in July.

Shelter costs rose 2.9% in July after increasing 1.6% in June. In addition to paying higher prices for electricity and homeowner's replacement costs, consumers also paid more for natural gas.

The mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, declined 4.2% in July, following a 5.0% decrease in June.

Transportation costs went up 2.7% in the 12 months to July after rising 1.0% in June. As well as paying higher prices for gasoline and passenger vehicle insurance premiums, consumers paid 1.7% more for the purchase of passenger vehicles in July.

Prices in the household operations, furnishings and equipment component were up 2.0% in July compared with the same month last year. This increase followed a 1.2% rise in June.

Food prices advanced 1.1%, after increasing 0.7% in June. In July, higher prices were recorded for both food purchased from restaurants and food purchased from stores. Prices rose for non-alcoholic beverages, sugar and confectionary, and dairy products and eggs, while prices for fresh fruit and fresh vegetables fell.

In the health and personal care component, prices rose 2.8% after increasing 1.7% during the 12-month period to June. Prices for personal care services and health care services were up.

Prices in the recreation, education and reading component rose 0.8%, following a 0.4% increase in June. Consumers paid more for cablevision and satellite services as well as for the use of recreational facilities and services. However, prices for home entertainment equipment, parts and services and computer equipment and supplies fell.

Consumers paid 2.7% less for clothing and footwear in July than a year earlier. Lower prices were recorded for women's, children's, and men's clothing.

The Bank of Canada's core index advanced 1.6% in the 12 months to July, following a 1.7% rise in June.

The seasonally adjusted monthly core index rose 0.1% in July, matching the increase in June.


TradingEconomics.com, Statistics Canada
8/20/2010 12:20:31 PM