Canada’s inflation rate eased to 7.6% in July as gasoline prices moved lower across the
country.
Statistics Canada said the Consumer Price Index (CPI) fell to 7.6% in July from a 40-year high
of 8.1% in June as the prices Canadians pay for gasoline at the pumps dropped sharply.
Canadians paid 9.2% less for gasoline in July than they did in June, the first monthly decline in
gas prices since April 2020 when the COVID-19 pandemic first hit.
July also marked the first time in 12 months that overall inflation in Canada decreased from the
previous month.
However, inflation remains well above the Bank of Canada's 2% target, increasing the likelihood
of further interest rate increases in coming months.
And while gas prices declined in July, the cost of groceries rose 9.9% from a year ago, their
fastest rate of increase since August 1981.
Bakery products, eggs, and fresh fruit are among the grocery items that drove prices higher.
Baked goods alone rose 13.6% in July as the Russian invasion of Ukraine has led to a surge in
wheat prices.
Higher costs for services such as flights (up 26%), natural gas (up 12%) and hotels (up 10%)
also contributed to July’s inflation reading.
The Bank of Canada most recently raised interest rates by a full percentage point to 2.50% in
an effort to dampen inflation, with economists forecasting another rate hike when the central
bank next meets in September.
