With all eyes on inflation numbers, the key determinant of Bank of Canada’s interest rate hikes, a key contributor shows no signs of respite according to data from the national statistical agency.
Canadians continued to see elevated grocery prices (+9.1%) and mortgage interest costs (+30.1%) in June, with those indexes contributing the most to the headline CPI increase, Statistics Canada (StatCan) said in its latest report. On the other hand, all-items excluding food index rose 1.7% and the all-items excluding mortgage interest cost index rose 2.0%.
The Consumer Price Index (CPI) represents changes in prices as experienced by Canadian consumers. It measures price change by comparing, through time, the cost of a fixed basket of goods and services.
Grocery prices remain one of the largest contributors to the all-items CPI, with a 9.1% year-over-year increase in June, nearly unchanged from the increase in May (+9.0%), the reprt stated.
The largest contributors within the food component were meat (+6.9%), bakery products (+12.9%), dairy products (+7.4%) and other food preparations (+10.2%).
Fresh fruit prices also grew at a faster pace year over year in June (+10.4%) than in May (+5.7%), driven, in part, by a 30.0% month-over-month increase in the price of grapes.
Food purchased from restaurants continued to contribute to the headline CPI increase, albeit at a slower year-over-year pace in June (+6.6%) than in May (+6.8%), StatCan said.
On a monthly basis, the CPI edged up 0.1% in June, following a 0.4% gain in May. After contributing to the increase in May, travel tours put downward pressure on the monthly all-items index in June. On a seasonally adjusted monthly basis, the CPI also rose 0.1%.
So what’s responsible for the downward trend? Gas prices!
Gasoline prices fell 21.6% year over year in June following an 18.3% decline in May, the StatCan report showed. The year-over-year decrease was a result of elevated prices in June 2022 amid higher global demand for crude oil as China, the largest importer of crude oil, eased some COVID-19 public health restrictions. In June 2023, consumers paid 1.9% more at the pump compared with May.
