Annual inflation rate jumped to 3.0% in July, highest reading since 2011

Lloyd Doyle
August 20, 2018

Earlier in the summer, the Bank of Canada said that the inflation rate would jump to about 2.5 percent before it settles back down to two percent in late 2019.

Those second-quarter GDP figures will come out on August 30.

At 9:35 a.m. EDT (1335 GMT), the Canadian dollar CAD=D4 was trading 0.56 percent higher at C$1.3078 to the greenback, or 0.7644 US cents.

The October crude contract closed up 33 cents at US$65.21 per barrel and the September natural gas contract ended up four cents at US$2.95 per mmBTU. That's up from 2.5 per cent in June, which was already the highest level in more than six years.

The Bank of Canada can raise interest rates to help prevent inflation from climbing too high.

Price increases for a basket of items consulted by the Bank of Canada in setting its key lending rate remained at 2.0 percent - the bank's target inflation rate - which CIBC Economics analyst said happened "somewhat surprisingly".

Reitzes noted the Bank of Montreal continues to expect the central bank to keep its key interest rate target on hold at its September 5 announcement, but raise it in October.

Statistics Canada says consumer prices for gasoline were up 25.4 per cent in July compared to a year ago.

Higher gasoline prices helped push the country's annual inflation rate in July to its highest reading since September 2011, it added.

The costs in Canada of buying passenger vehicles, auto insurance, food, telephone services, air transportation and travel tours were also up, said the government statistical agency.

Restaurant food has risen by 4.4 per cent in the past year, and mortgage interest costs are up by 5.2 per cent.

"An amount of up to $600 million of tariffs per year may be passed through to consumer prices, which may cause a decimal place increase in the posted CPI change during a limited period of time", the agency said.

Other reports by Iphone Fresh

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