Inflation steady at 1.3%: StatsCan
Growth led by food prices partially offset by cheaper gas
OTTAWA— Lower costs at the pump in August weren’t enough to offset a broad rise in consumer prices including higher prices for restaurant fare, according to the latest inflation report from Statistics Canada.
The federal agency said on Friday that Canada’s annual inflation rate rose 1.3 per cent in August compared with a year earlier, unchanged from July.
Food prices were the biggest contributor to inflation last month, rising 3.4 per cent, followed by household operations, which includes telecom services such as cable and Internet as well as home furnishings.
Restaurant prices increased 2.8 per cent over last year, and prices for store-bought food increased 4 per cent — but there was some relief for meat-eaters, as the price of beef declined for the second straight month.
Statistics Canada’s household operations, furnishings and equipment index increased 2.5 per cent in the 12 months to August. Yet growth actually fell from July, when the index rose by 3.3 per cent, and the agency chalked up the difference to lower prices for telephone services.
Seven of the eight components of the consumer price index posted gains, with transportation the only laggard as gas prices fell by 12.6 per cent in the 12 months to August.
The transportation sector fell by 2.6 per cent overall as gasoline continued its slide that began late last year, and prices for new passenger vehicles increased less in August than in July.
Inflation has been closely watched for signs of flagging consumer spending after the contraction in Canada’s GDP in the first half of the year that raised talk of a recession.
RBC senior economist Nathan Janzen said the first-half recession didn’t spill over into the job market, so household incomes have held up despite the downturn.
Combined with cheaper gas, that means the purchasing power of the average Canadian has actually gone up, he said.
The Statistics Canada report was in line with analysts’ expectations.