Canadian annual inflation rose by two per cent in July to hit the Bank of Canada’s ideal target for a second straight month. The latest consumer price index found higher costs, year-over-year, for auto insurance, mortgage interest and fresh vegetables. A real estate sold sign hangs in front of a west-end Toronto property Friday, Nov. 4, 2016. THE CANADIAN PRESS/Graeme Roy

Inflation hits Bank of Canada 2% target for second straight month

Prices showed strength in other areas, including an 18.9 per cent increase in the cost of fresh vegetables

Canadian annual inflation came in at two per cent in July to hit the Bank of Canada’s ideal target for a second straight month.

Compared with a year earlier, consumers paid less last month for gasoline, internet services and traveller accommodation, Statistics Canada said Wednesday.

Prices showed strength in other areas, including an 18.9 per cent increase in the cost of fresh vegetables compared to the previous year. The consumer price index also found higher costs, year-over-year, for auto insurance, mortgage interest and passenger vehicles.

The average of Canada’s three gauges for core inflation, which are considered better measures of underlying price pressures by excluding volatile items, was also close to the central bank’s target at 2.03 per cent. It was up slightly from a revised reading of two per cent in June.

On their own, the headline and core numbers don’t put immediate pressure on the inflation-targeting Bank of Canada to adjust interest rates. The central bank can move the interest rate as a tool to try and promote or cool off inflation.

READ MORE: Lower gas prices slow annual inflation rate to Bank of Canada’s 2% bull’s-eye

But with weakening global economic conditions related to the U.S.-China trade war some economists now expect governor Stephen Poloz to cut interest rates this fall — and perhaps as early as September.

The Canadian economy has continued to perform well despite mounting concerns about the global outlook.

A closer look at the inflation data for July, shows gas prices had less of a year-over-year fall than the previous month’s report. The smaller drop applied more upward pressure on the headline number as consumers paid more for gas in July compared with June.

By omitting pump prices, the agency said last month’s overall annual inflation number was 2.4 per cent.

Prices, the report said, increased in all eight of its major categories compared with a year earlier. However, annual price pressures in the services index slowed last month to 2.4 per cent, down from 2.8 per cent.

By region, consumer prices slowed the most in Manitoba and British Columbia, the report said. Statistics Canada attributed the deceleration in Manitoba to the July 1 drop in the province’s retail sales tax.

On a month-to-month basis, the agency said consumers paid 2.5 per cent less for telephone services in July compared with June. The drop followed pricing changes across the industry as wireless companies faced tougher competition.

The agency said the decrease in phone plan costs was offset somewhat by higher price tags on devices like smartphones and tablets. From June to July, the price of these devices rose 42.5 per cent.

Andy Blatchford, The Canadian Press


Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Slideshow: Hope’s winter weather in photos

Readers submit photos of Hope under a blanket of snow

Borrow $8 billion for Fraser Valley rail link, Abbotsford mayor urges province

Henry Braun urges province to borrow billions to connect Abbotsford & Chilliwack to Metro Vancouver

Vandals destroy sign at Hope Legion

Sign found to have fire damage and missing letters Tuesday morning

Upper Fraser RCMP joins Twitter

Twitter feed once limited to Chilliwack expands

Three concerts in two weeks at Bozzini’s Upstairs Lounge in Chilliwack

Jon Brooks and Lynne Hanson are up first, followed by WiL and then Dan Bern for February concerts

Four things ‘not’ to do if you run into Prince Harry and Meghan in B.C.

Here is a list of some things you definitely should NOT do, according to the BBC

B.C.-based Coulson Aviation C-130 crashes in Australia

Three people are confirmed dead in the crash in New South Wales

New nasal spray launched in Canada to combat hypoglycemic shock in diabetics

Baqsimi is a nasal spray contains three milligrams of glucagon

B.C. RCMP spent roughly $750K on massive manhunt for Port Alberni men

Manitoba RCMP helped with 17-day search through the province’s northern terrain

Much-raided Langley animal rescue society loses registered charitable status

Revoked following an audit by Canada Revenue Agency, records show

Future space homes could be made of mushrooms

NASA explores use of fungi to build structures in space

Youth hit with gun butt during fight at Lower Mainland mall

RCMP are investigating the fight between two groups of youths

Weather warning: 80 mm of rain expected overnight in Metro Vancouver

Environment Canada is urging caution when driving

Most Read