Canadian consumer prices came in largely as expected for July as lower gasoline prices and more comparable sale-tax rates to a year earlier helped bring the inflation rate down.
Annual inflation was 2.7% in July, Statistics Canada said Friday, down from 3.1% in June.
The core rate, which excludes volatile items such as energy and some foods, rose to 1.6% from 1.3 per cent.
Economists polled by Bloomberg had expected the July inflation rate to be 2.8 per cent and the core rate to be 1.6%.
The Bank of Canada aims for an overall inflation rate of about 2% and monitors the core rate for underlying trends.
On a month-to-month basis, Canadian consumer prices were up 0.1% in July on a seasonally adjusted basis after declining 0.3% in June.
Among the factors contributing to the lower annual inflation rate last month, harmonized sales taxes in Ontario and British Columbia, as well as an increase in the sales tax in Nova Scotia -- all of which came into effect in July last year -- are no longer causing a difference in year-to-year prices.
Also, the effect of gasoline inflation subsided somewhat, with prices being up 23.5% from a year earlier compared to 28.5% in June.
Food prices were up 4.3% in July from a year earlier, as they were in June. Within this category, food bought from stores was 5.1% more expensive and 2.2% higher at restaurants.
Most major price categories saw slower annual inflation in July than the previous month. In transportation, costs were up 6.5 per cent compared to 7% in June. This included gasoline prices and also considered a 1% decline in car prices.
Shelter costs were up 1.3% from a year earlier compared to 1.7% the month before. This factored in declines in costs for mortgage interest and natural gas of 1.9 and 3.3%, respectively.
Clothing and footwear prices were up 1% annually in July compared to 0.7% in June, making it the only major price category in which annual inflation accelerated.
By province, annual inflation rates in July ranged from 1.7% in British Columbia to 3.8% in New Brunswick. Among some of the others, it was 3% in Ontario, 3.3% in Quebec and 1.9% in Alberta.
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