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Canada’s inflation rate bucked its recent trend of slowing last month and instead rose at a 3.3 per cent annual pace in July, Statistics Canada said Tuesday.
That was an increase from 2.8 per cent the previous month. Gas prices were a major factor pushing up the inflation rate, mostly due to what economists call the base effect
A big, 9.2 per cent drop in pump prices in July 2022 was a major factor driving the overall inflation rate down that month. But that was more than 12 months ago now, so that plunge isn’t reflected in the annual numbers any more, which means gasoline is having less and less of an impact in dragging down the rate ever since.
“Gasoline prices are 12.6 per cent below year ago levels in July,” TD Bank economist Leslie Preston said. “But, the fact that they were 21.6 per cent below year ago levels in June has resulted in significantly less downward pressure on headline inflation from energy prices.”
And gas prices weren’t the only type of energy bill that was a big factor in the inflation rate going up. The price of electricity skyrocketed in the past year, up by 11.7 per cent. That’s more than twice the annual increase of 5.8 per cent clocked in June and the biggest reason for the uptick was a more than doubling of electricity bills in Alberta, which rose by 127.8 per cent in the year up to July.
“In the early months of the year, when demand was last this high, provincial rebates and a price cap kept prices lower for consumers. These policy interventions were gradually phased out and ended in spring 2023,” Statscan said. “This decrease is no longer impacting the 12-month movement, putting upward pressure on the year-over-year figure.”
Grocery bills keep getting more expensive
Food prices, another thing that has been driving up the cost of living, eased somewhat during the month, but grocery bills are still going up at almost three times the inflation rate.
Grocery prices increased by 8.5 per cent in the year up to July. That’s an easing from 9.1 per cent the previous month.
And mortgages, another major source of pressure on the cost of living, continued their eye-watering ascent.
Mortgage interest costs have increased by 30.6 per cent in the past year. That’s another record year-over-year gain, and the largest single factor in the increase in the overall inflation rate.
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