Canada: Inflation is unchanged in July at Central Bank's target midpoint
August 21, 2019
Consumer prices increased a seasonally-adjusted 0.4% from a month earlier in July, contrasting June’s 0.1% fall. According to Statistics Canada, the increase was mostly driven by higher prices for transportation and recreation and education.
Inflation was stable at June’s 2.0%, beating market analysts’ projections and remaining at the midpoint of the Central Bank’s target range of 1.0% to 3.0%. Meanwhile, annual average inflation softened marginally to 2.0% in July (June: 2.1%).
Going forward, inflation should remain relatively stable and well within the target range, supported by a tight labor market, strong wage growth and the recent introduction of the carbon tax. That being said, developments in oil markets remain a key risk to the inflation outlook.
Author: Steven Burke, Economist