Canada Inflation Rises On Food, Shelter Prices
Ottawa — Canada’s annual inflation rate quickened in June as food and shelter costs increased and energy provided less of a drag.
The consumer price index rose 1 percent in June from a year ago, following the 0.9 percent pace in May, Statistics Canada said Friday in Ottawa. Prices for meat, dairy and bakery products and fresh fruit climbed at least 2.5 percent.
The Bank of Canada cut interest rates two days ago saying a weak economy threatened to keep inflation from returning to a 2 percent target, and the “trend” of prices was between 1.5 percent and 1.7 percent. The plunge in crude oil prices below $50 a barrel has driven down total inflation while core prices have remained elevated on higher costs for meat and telecommunications products.
The core rate excluding eight volatile products accelerated to 2.3 percent, close to the March reading of 2.4 percent that was the fastest since 2008. Economists surveyed by Bloomberg forecast overall inflation at 1 percent and the core rate remaining at 2.2 percent.
Energy costs fell 9 percent in June from 12 months earlier, less than May’s 11.8 percent rate of decline. Excluding energy the inflation rate slowed to 2.1 percent from 2.2 percent.
The central bank sets interest rates to keep inflation in the middle of a 1 percent to 3 percent band, and it estimates consumer price gains averaged 0.9 percent in the second quarter, and will quicken to 2.1 percent by the end of the first quarter of next year. Core prices averaged 2.2 percent in the second quarter and will slow to 2 percent between October and December, the bank predicts.
Core inflation has exceeded the Bank of Canada’s 2 percent target for overall inflation since August.
Friday’s report showed meat costs rose at a 6.6 percent pace and telephone services by 3.9 percent. Shelter costs rose at a 1 percent annual pace, accelerating from 0.5 percent in May.
On a monthly basis, total inflation rose 0.2 percent in June, slowing from a 0.6 percent increase in May. The core index of prices was unchanged.
On a seasonally adjusted basis, consumer prices rose 0.4 percent for a second month in June. The adjusted core rate of inflation quickened to 0.3 percent from 0.2 percent.