Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.5 per cent on a year-over-year basis in July, down from a 2.7 per cent increase in June. Month-over-month, on a seasonally adjusted basis, CPI rose by 0.3 per cent in July. The deceleration in headline CPI was widespread across sectors, primarily driven by declining prices on electricity, passenger vehicles, and travel tours. Excluding gasoline, the CPI rose 2.5 per cent in July. Gasoline placed further upward pressure on inflation in July, with a year-over-year growth rate of 1.9 per cent compared to 0.4 per cent in June. Downward pressure from electricity and other factors drove shelter costs down from 6.2 per cent in June to 5.7 per cent in July year-over-year. Mortgage interest costs were up 21 per cent and rent was up 8.5 per cent from last July. Finally, durable goods costs fell 1.7 per cent while services costs rose 4.4 per cent year-over-year. In BC, consumer prices rose 2.8 per cent year-over-year, up from 2.6 per cent in June. The Bank of Canada's preferred measures of core inflation, which strip out volatile components, fell to between 2.4 and 2.7 per cent year-over-year in July.

Canada's inflation report for July continued the positive overall trends in June, with headline CPI reaching its lowest level since March 2021. This was achieved in part due to declines in nearly all travel-related services in July year-over-year. However, this is largely a base-year effect, as July 2023 experienced soaring travel-related prices due to it being the first summer without restrictions related to the COVID-19 pandemic.  Moreover, CPI-median and CPI-trim continue declining towards the mid-point of the Bank of Canada's target range. Taken together, July's inflation report bolsters the likelihood of a third consecutive rate cut from the Bank of Canada in September. 

https://mailchi.mp/bcrea/canadian-inflation-july-2024-august-20th-2024

For more information, please contact: Gino Pezzani.