Canada's annual inflation rate eases to 1.7% in July
Analysts polled by Reuters had forecast the annual inflation rate at 1.8% and the monthly inflation rate at 0.3%. The CPI increased by 0.3% in July from 0.1% in June on a monthly basis, Statistics Canada said.
Fuel prices dropped by 16.1% on a yearly basis in July, following a 13.4% decline in June. On a monthly basis the price of he fuel dropped as geopolitical tensions eased and crude oil producing nations increased output.
The elimination of carbon levy on purchase of petrol has helped bring down the cost of the fuel on a yearly basis and is expected to maintain a downward pressure on the CPI basket for another eight months.
This has helped the overall consumer price index to clock a rate below the mid-point of the Bank of Canada's 1% to 3% target range, even as there are signs of rising prices of food.
Excluding gasoline, the CPI rose 2.5% in July, Statscan said.
The main drivers of the increase in costs were rise in food prices and shelter costs, StatsCan said. Food prices, which contributes close to 17% to the overall CPI basket, rose by 3.3% in July from 2.9% in June.
Shelter costs, the biggest component of the CPI basket, rose 3% in July from 2.9% in June, marking the first increase since February last year. This was driven by a smaller decline in cost of natural gas and rise in rents by 5.1%.
Core measures of inflation, which are closely tracked by the Bank of Canada have remained resilient and hovered around the top of the bank's preferred range of CPI.
Money markets are betting the odds of a rate cut on September 17 at 32% after the bank has stayed put at 2.75% for its last three rate decision meetings.
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