Consumer price index up 1.0% from year ago: StatsCan

first_img Facebook LinkedIn Twitter Stagflation is U.S. economists’ biggest fear, SIFMA says Related news The move matched economist expectations, according to Thomson Reuters. The report follows a decision by the Bank of Canada this week to cut its key interest rate by a quarter of a percentage point to 0.5% and lower its expectations for economic growth this year. In making its decision Wednesday, the central bank said it expected inflation to remain below 2% until early 2016, while core inflation is forecast to remain near 2%. However, Statistics Canada said Friday core inflation was 2.3%. Economists had expected a gain of 2.2%. Bank of Montreal senior economist Benjamin Reitzes said much of the increase Friday could be attributed to the drop in the Canadian dollar. “It is clear that the weaker Canadian dollar is having an impact and the fact that the dollar has weakened again in recent weeks suggests that we will get a little more of that pass through into inflation in the months ahead,” he said. But Reitzes said the Bank of Canada is looking past the impact of the weak loonie and other temporary factors on inflation. Setting aside what it described as “transitory effects” including the recent fall in the Canadian dollar, the Bank of Canada judged the underlying trend in inflation to be about 1.5 to 1.7%. The Canadian dollar has fallen about 10% against the U.S. dollar since the start of the year, raising the cost of imported goods from the country’s largest trading partner. The loonie was down 0.10 of a U.S. cent at 77 cents on Friday. Economist David Madani of Capital Economics said higher prices in the recreation, reading and education category helped boost the core index, which he attributed to the weaker loonie increasing the cost of travel to the United States. Excluding energy prices, inflation was 2.1% as seven of the eight major components were up from a year ago. The transportation index, which includes gasoline, posted its eighth consecutive year-over-year decline as it slipped 2.6% from last year as gasoline prices were down 14.1% from the same month in 2014. However, on a month-over-month basis, gasoline prices were up 6.0% in June after rising 5.5% in May. The price of food was up 3.4% compared with a year ago as the price of meat increased 6.6%. Prices were also up for dairy products, fresh fruit and baked goods. Shelter costs were up 1.0%, boosted by a rise in electricity prices. Home and mortgage insurance costs were also higher. Regionally, prices were up from a year ago in nine provinces with Prince Edward Island posting the lone drop, seeing a decrease of 0.1%. Saskatchewan posted the largest increase with a gain of 1.9%, followed by Alberta with an increase of 1.7%. Canada’s annual inflation rate ticked up in June as the price of food, especially meat, and housing climbed, offset in part by lower gasoline prices. Statistics Canada said Friday the consumer price index rose 1.0% in June compared with a year ago, following an increase of 0.9% in May. Craig Wong center_img U.S. economy is warming up, but unlikely to overheat: Moody’s Keywords Inflation Share this article and your comments with peers on social media Another jump in prices tightens the squeeze on U.S. consumerslast_img read more