Local, provincial consumer prices fall as inflation climbs

Overall consumer prices in Alberta declined slightly in July despite higher costs for household natural gas and electricity, according to Statistics Canada.

Its monthly Consumer Price Index was down 0.2 per cent for Alberta and 0.1 per cent in the Calgary metro area from June. Nationally, the index was up 0.1 per cent.

Year-over-year, prices were up 2.5 per cent in the Calgary region, 2.2 per cent in Alberta and 1.3 per cent nationally.

Todd Hirsch, chief economist with ATB Financial, said higher costs for natural gas (up 17.9 per cent) and electricity (8.9 per cent) contributed to Alberta’s overall inflation, while no items in the so-called basket of consumer goods used to measure the CPI showed appreciable price decreases last month.

Overall, the small increase to Canada’s inflation last month will not cause the Bank of Canada any worries about overall price pressures, he said.

“Inflation is still near the lower end of the one to three per cent band that the bank uses as a preferred range,” Hirsch said.

“With the bank expecting economic growth expected to be choppy this year — and with plenty of slack in the economy remaining — reductions in monetary stimulus, i.e. increases in interest rates, are still likely more than a year away.”

Statistics Canada said the annual increase in the CPI in July was led by transportation prices, which rose 2.7 per cent on a year-over-year basis, following a 2 per cent gain in June. Compared with July 2012, Canadians paid 6.1 per cent more for gasoline last month.

Food prices rose 0.8 per cent in the 12 months to July, the smallest gain in food prices since June 2010, following a 1.2 per cent advance in June, said Statistics Canada.

Douglas Porter, chief economist at BMO Capital Markets, said “the big picture for Canadian inflation is that it is now gradually climbing from the depths of earlier this year, but it remains non-threatening — think Flipper, not Jaws.”

“The steady drip-drip-drip drop in the Canadian dollar will add to the mild upward pressure in inflation, but a sluggish underlying growth profile for the economy and slow wage growth will restrain the upswing,” he said.