Gas prices shown in Carleton Place, Ont., May 17, 2022. UPDATE 5:56 a.m Canada’s annual inflation rate slowed to 7.6% in July, with the slowdown driven largely by lower natural gas prices. Inflation hit a near 40-year high of 8.1 percent in June, but economists widely expected inflation to have slowed since then. In its latest consumer price index report, Statistics Canada said July’s price increase was the smallest monthly gain since December 2021. It also marks the first decline in annual inflation since June 2020. The feds said natural gas prices rose 35.6 percent year-over-year in July, compared with 54.6 percent in June. “Continued concerns related to the global economic slowdown, as well as increased COVID-19 pandemic public health restrictions in China and a slowdown in gasoline demand in the United States led to a decrease in global demand for crude oil, putting downward pressure on prices at the pump. “, the report said. But while gas prices fell, grocery food prices rose at the fastest pace since August 1981, with prices rising 9.9 percent year over year compared with 9.4 percent in last month. Baked goods rose 13.6 percent from a year ago amid higher input costs as Russia’s invasion of Ukraine continues to put upward pressure on wheat prices. Other food prices also rose faster, including eggs, up 15.8 percent, and fresh fruit, up 11.7 percent from last year. As mortgage costs rise with higher interest rates, the report notes that rent prices are accelerating, rising faster in July than the previous month. With more Canadians traveling during the busy summer season, airfares were up about 25 per cent in July compared to the previous month. Travel accommodation prices rose nearly 50 per cent from a year ago, with the biggest price increases in Ontario. As countries around the world struggle with soaring prices, there are some signs that inflation is starting to ease, with the US seeing its inflation rate ease in July as well. However, inflation is well above the Bank of Canada’s 2 percent target. The central bank is watching the latest inflation measure as it prepares to set its next key rate on September 7, when it is expected to raise lending rates again. ORIGINAL 5:29 am Statistics Canada is expected to release July inflation data this morning. Economists believe the rate of inflation may have already peaked given the recent drop in natural gas prices, which fueled May and June inflation. RBC forecasts that the annual rate of inflation eased from a nearly 40-year high of 8.1 percent in June to 7.7 percent in July. As countries around the world struggle with soaring prices, there are some signs that inflation is beginning to moderate, with the US seeing its inflation rate ease in July. The Bank of Canada is due to make its next key rate announcement on September 7 and is expected to raise lending rates again. The central bank hopes its interest rate hikes will bring inflation back to its two percent target without triggering a severe economic downturn.
