Consumer prices rose 3.4 percent from July 2007, Statistics Canada said today in Ottawa, in line with economists' median forecast in a Bloomberg survey. Prices rose 0.3 percent from June, falling short of economists' 0.4 percent forecast.
The Bank of Canada signaled last month that interest rates will stay put for the foreseeable future, even with growth virtually stalled. Still, gasoline prices have eased since the bank predicted last month that inflation will peak at 4.3 percent next year, more than double policy makers' target.
Gasoline pump prices rose 5.1 percent to a monthly record of C$1.39 per liter in June, according to data compiled by Bloomberg, and have since dipped to C$1.29 as of last week.
Canada's dollar increased 0.4 percent to C$1.0559 per U.S. dollar at 7:34 a.m. in Toronto from C$1.0599 yesterday. One Canadian dollar buys 94.70 U.S. cents.
Labor and housing markets in Canada have softened in recent months, spurring expectations that the Bank of Canada will cut borrowing costs in the first quarter of next year to stimulate the world's eighth-largest economy.
Excluding gasoline and seven other volatile items, inflation rose 1.5 percent in July from a year earlier and 0.1 percent from June.
Economists predicted the so-called core rate would gain 1.6 percent from a year earlier and 0.2 percent on a monthly basis.
Bank of Canada Governor Mark Carney said June 20 that he may rely less on core inflation as a guide to future trends during what he referred to as a ``super cycle'' of rising commodity prices.
Policy makers set interest rates to keep inflation between 1 percent and 3 percent, with an optimal target of 2 percent. The central bank cut interest rates four times between December and April to fend off an export slump before pausing in June and holding again on July 15.
After the July decision, the central bank said the economy will grow just 1 percent this year, the slowest since 1992 when Canada had its last recession.
Prices for gasoline were up 29 percent between July 2007 and July 2008, while natural gas costs for consumers rose 25 percent over that period, the agency said.
Food prices in stores were up 4.3 percent, led by bakery products such as bread. The price index for shelter gained 5.4 percent over the 12-month period, the agency said.
Falling prices for automobiles helped keep annual inflation from accelerating further, the statistics agency said.