The good news is that the cost of gas at the pump is down from a year ago, the bad news is a 17.3 per cent increase in the cost of fresh vegetables which is blamed on poor weather in farming regions.
The annual inflation number for June hit the Bank of Canada’s ideal target as it came down from 2.4 per cent in May, Statistics Canada said Friday in a new report. It marked the first price deceleration after four straight months of year-over-year increases.
The neutral position of two per cent — right at the mid-point of the Bank of Canada’s range of one to three per cent — doesn’t put immediate pressure on governor Stephen Poloz to adjust his key interest rate.
Leaving out gas prices, Statistics Canada said last month’s annual inflation number was 2.6 per cent.
The 9.2 per cent drop in pump prices was partly due to rising inventory levels in the United States and Alberta’s elimination of its carbon pricing measures at the end of May, Statistics Canada said.
In addition to weaker gas prices, consumers paid less last month for internet services, digital equipment and traveller accommodation.
Consumers also shelled out more in June for auto insurance, mortgage borrowing costs, vehicle purchases and rent.
The average of Canada’s three gauges for core inflation, which are considered better measures of underlying price pressures by omitting volatile items like gasoline, decelerated slightly to 2.03 per cent, down from a revised 2.1 per cent the previous month.
Last week, the Bank of Canada predicted overall inflation to drop temporarily in the third quarter of 2019 to 1.6 per cent as it reflects movements in gas prices, airfare volatility and the recent elimination countermeasures against U.S. steel and aluminum tariffs.
The central bank estimated inflation to be 1.8 per cent for the year before picking up its pace to about two per cent in 2020 and 2021. -CINEWS