Ottawa, August 21, 2019—The Conference Board of Canada’s Principal Economist Alicia Macdonald offers the following insights on today's Consumer Price Index data:
“The consumer price index increased 2.0 per cent on a year-over-year basis in July, matching the increase in June. Core inflation remained at the Bank’s 2.0 per cent target. With wage growth accelerating and inflation well-anchored, the Bank of Canada is expected to remain on hold next month as it assesses mounting risks on the global economic front.”
- Inflation held steady at 2.0 per cent in July.
- Lower gasoline prices relative to last summer continue to weigh on the consumer price index. Excluding gasoline, CPI increased by 2.4 per cent last month.
- While higher mortgage interest costs continue to be one of the main drivers of upward price pressures, the recent decline in fixed mortgage rates is providing a bit of a reprieve to highly indebted households. The mortgage interest component of the CPI was up 8.0 per cent in July compared to growth of 8.2 per cent in the spring.
- The average of the Bank of Canada’s three measures of core inflation also came in at 2.0 per cent last month—matching the increase in June. CPI-trim and CPI-median held steady at 2.1 per cent. CPI-common nudged up to 1.9 per cent after increasing by 1.8 per cent the previous month.
- This morning’s inflation report was consistent with what we have been seeing in the Canadian data over the past few months: domestic conditions remain decent and Canada remains one of the few major economies in the world with inflation at target.
- Despite the relatively rosy economic conditions we are currently experiencing, there are mounting risks on the global economic front and the Bank of Canada is watching these risks closely. Even with risks to the economic outlook tilting to the downside, robust domestic conditions are likely to keep the Bank on the sidelines next month.