Higher read­ing

Canada’s an­nual in­fla­tion rate jumped to three per cent in July

The Western Star - - HEROES / BUSINESS - BY CRAIG WONG

Canada’s an­nual in­fla­tion rate in July hit its high­est level in nearly seven years as gaso­line prices and the cost of air trans­porta­tion pushed prices higher.

Sta­tis­tics Canada said Fri­day the con­sumer price in­dex for last month was up 3.0 per cent on a year-over-year ba­sis, com­pared with a 2.5 per cent in­crease in June.

Econ­o­mists had ex­pected a year-over-year in­fla­tion rate of 2.5 per cent, ac­cord­ing to Thom­son Reuters Eikon.

The re­sult, the high­est read­ing since Septem­ber 2011, put in­fla­tion at the top end of the Bank of Canada’s tar­get range of one to three per cent.

CIBC econ­o­mist Andrew Gran­tham said the read­ing “at least mod­estly” in­creased the odds of a Septem­ber in­ter­est rate hike by the Bank of Canada.

“We con­tinue to lean to­ward an Oc­to­ber rate hike rather than Septem­ber. How­ever, a big up­side sur­prise in Q2 GDP could tip the bal­ance on that,” Gran­tham wrote in a re­port.

Sec­ond-quar­ter GDP fig­ures are set to be re­leased Aug. 30.

The Cana­dian dol­lar rose after the lat­est in­fla­tion re­port was re­leased, re­flect­ing the in­creased chance of higher in­ter­est rates.

Ear­lier this sum­mer, the Bank of Canada pre­dicted in­fla­tion to move as high as 2.5 per cent - due to tem­po­rary fac­tors like higher gas prices - be­fore it set­tles back down to two per cent late next year.

The Bank of Canada can raise in­ter­est rates to help pre­vent in­fla­tion from climb­ing too high. The cen­tral bank raised its trend-set­ting in­ter­est rate to 1.5 per cent ear­lier this sum­mer.

How­ever, the av­er­age of Canada’s three mea­sures of core in­fla­tion, which leave out morevolati­le data like pump prices and are closely watched by the cen­tral bank, rose last month to 2.0 per cent com­pared with 1.96 per cent in June.

Ben­jamin Reitzes, Cana­dian rates and macro strate­gist at the Bank of Mon­treal, said one month did not make a trend and added that core in­fla­tion re­mains sta­ble.

“At this point it would take more than one month I think to re­ally change the nar­ra­tive gen­er­ally around in­fla­tion,” he said.

“The over­all back­drop for in­fla­tion hasn’t changed all that much.”

Reitzes noted the Bank of Mon­treal con­tin­ues to ex­pect the cen­tral bank to keep its key in­ter­est rate tar­get on hold at its Sept. 5 an­nounce­ment, but raise it in Oc­to­ber.

All eight ma­jor com­po­nents of the con­sumer price in­dex rose on a year-over-year ba­sis in July with the trans­porta­tion in­dex be­ing the largest con­trib­u­tor with an 8.1 per cent in­crease.

A 25.4 per cent in­crease in the price of gaso­line and a 28.2 per cent in­crease in the cost of air trans­porta­tion com­pared with a year ago helped push over­all prices higher.

Food pur­chased from res­tau­rants also gained 4.4 per cent, while mort­gage in­ter­est costs rose 5.2 per cent.

On the flip side, tele­phone ser­vice costs were down 5.1 per cent and trav­eller ac­com­mo­da­tions slipped 4.1 per cent com­pared with a year ago.

In a sep­a­rate re­port, Sta­tis­tics Canada es­ti­mated the di­rect im­pact of tar­iffs on U.S. im­ports im­ple­mented ear­lier this year on the con­sumer price in­dex to be up to 0.07 per­cent­age points.

“An amount of up to $600 mil­lion of tar­iffs per year may be passed through to con­sumer prices, which may cause a dec­i­mal place in­crease in the posted CPI change dur­ing a lim­ited pe­riod of time,” the agency said.

(LEFT) The So­ci­ety of St. Vin­cent de Paul in Cor­ner Brook was re­cently given the keys to a 2010 Dodge Car­a­van, do­nated by the Steele Group of Com­pa­nies, to use for their char­i­ta­ble ac­tiv­i­ties within the area. The so­ci­ety helps peo­ple in need, in­clud­ing spon­sor­ing Mary’s Kitchen — a free soup kitchen of­fered at the Ro­man Catholic cathe­dral ev­ery Fri­day from noon to 1 p.m. They also ac­cept do­na­tions of fur­ni­ture and house­hold items and de­liver them to peo­ple who have the need, but not the fi­nan­cial abil­ity to af­ford such items. Here, Dave Gib­son, left, rep­re­sent­ing the Steele Group of Com­pa­nies, pre­sents the keys of the van to a grate­ful Mau­rice McDon­ald, trea­surer of Holy Redeemer Con­fer­ence of the So­ci­ety of St. Vin­cent de Paul in Cor­ner Brook.(RIGHT) Some of the chil­dren of Step­ping Stones Day­care raised over $100 for the Janeway with a le­mon­ade stand in mem­ory of Ne­veah De­nine. The chil­dren are, from left, Seren­ity Tar­bett, Spencer McIsaac, Lexi Sul­li­van and Carter An­stey. Mean­while, the le­mon­ade stand was put to­gether by ad­min­is­tra­tor Kelly Piercey and Lorie Cur­tis su­per­vised the chil­dren.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.