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​Falling Energy Prices Weigh on Price Growth

The consumer price index was up 2.0 per cent on a year-over-year basis in June, down from 2.4 per cent growth in the proceeding month.

Ottawa, July 17, 2019—The Conference Board of Canada’s Principal Economist Alicia Macdonald offers the following insights on today's Consumer Price Index data:

“After increasing by 2.4 per cent in May, inflation growth slowed to a 2.0 per cent pace in June as energy prices fell. Core inflation came in at the Bank of Canada’s 2.0 per cent target, giving the Bank little reason to veer from its current wait and see approach.”

Insights

  • The consumer price index was up 2.0 per cent on a year-over-year basis in June, down from 2.4 per cent growth in the proceeding month.
  • Putting upward pressure on the index was a large increase in fresh vegetable prices (up 17.3 per cent) and mortgage interest costs (up 8.1 per cent) as past interest rate increases continue to drive up debt servicing costs.
  • Weighing on prices last month was a sharp decline in gasoline prices which fell 9.2 per cent relative to last year. Excluding the impact of this fall in gas prices, consumer prices were up 2.6 per cent from last year, a slightly softer growth rate than the 2.7 per cent increase (excluding gasoline) in May.
  • The average of the Bank of Canada’s three measures of core inflation was 2.0 per cent last month—at the Bank’s target but down slightly from a 2.1 per cent pace last month.
  • Overall, this mornings report showed that inflation remains at target but does not show signs of accelerating. As a result, it will not change the Bank of Canada’s wait and see approach to the timing and direction of future interest rate changes.

For more information contact

Corporate Communications
613-526-3280
corpcomm@conferenceboard.ca


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