Canada: Inflation softens in July
August 22, 2014
In July, consumer prices decreased a seasonally-adjusted 0.1% over the previous month, marking the first drop since October 2013. The result contrasted the 0.3% increase in June and the 0.1% rise the markets had expected. According to Statistics Canada, the overall price decrease was driven mainly by a decline in the price for transportation, as well as a decrease in the price for food and household operations. In contrast, the prices for alcoholic beverages and tobacco products rose.
Annual headline inflation softened from 2.4% in June to 2.1% in July, which was slightly below market expectations of a 2.2% price increase. Inflation is still well anchored within the Central Bank’s tolerance margin of plus/minus 1.0 percentage points around its target of 2.0%. Annual average inflation continued on an upward trend and rose from June’s 1.4% to 1.5% in July. Core annual inflation, which excludes volatile items such as gasoline and fresh food, remained constant at June’s 1.4%.