Core Inflation m/m +0.0% +0.0%!Headline: +1.3%!
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The cost of food in Canada experienced a 3.2 per cent increase in only one year, following a 3.4 per cent increase in June.
“Prices advanced on year-on-year basis for seven of the eight main components of the index”.
The challenge would prove particularly hard should the recent bout of oil price weakness persist or worsen, raising the question of whether the Bank of Canada would want to further help the non-energy sector pick up the slack from the energy sector.
Lower energy prices continued to moderate the year-over-year rise in the CPI; however, the effect was less pronounced in July than in the previous month.
Clothing and footwear were up 1.3 percent.
Despite some data this week that surprised on the upside and an inflation rate that picked up in July, the overall picture of a weak economic growth in 2Q combined with above-target inflation is not much changed.
Moreover, consumer prices are on the rise in every province except Prince Edward Island.
Core inflation, which excludes the most volatile categories out of the consumer price index including fruit, vegetables, mortgage interest and natural gas, increased 2.4%.
Ferley said Canada’s central bank will likely hold the overnight rate at 0.5% for the rest of the year and into 2016.
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The inflation report came as Statistics Canada also reported retail sales for June increased 0.6 per cent to $43.2 billion, topping expectations for a gain of 0.2 per cent, according to Thomson Reuters. With underlying inflation low and real GDP growth expected to resume in H2 (following a contraction in H1). Both results matched economist survey forecasts.
