Canada: Inflation drops to lowest level since March 2021 in July
Inflation came in at 2.5% in July, which was down from June’s 2.7%, matched market expectations, and was within the Central Bank’s 1.0%–3.0% target range. July’s reading represented the weakest inflation rate since March 2021, and was driven by softer price rises for housing and transportation.
Annual average inflation remained at June’s 3.1% in July. Meanwhile, core inflation edged down to 1.7% in July from the previous month’s 1.9%.
Finally, consumer prices rose 0.43% in July over the previous month, swinging from the 0.06% fall recorded in June.
On the monetary policy implications, TD Economics’ James Orlando said:
“With inflation risks fading, the central bank’s focus has pivoted to weakness in the rest of the economy. Indeed, consumer spending looks to have taken a breather alongside a steady deterioration in the jobs market. Given that the policy rate remains at restrictive levels, even after two rate cuts in June/July, there is plenty of room for the BoC to keep cutting over the rest of this year.”