Newspaper article The Canadian Press

Canada's Annual Inflation Rate 1.5% in June as Food Prices Cool Down

Newspaper article The Canadian Press

Canada's Annual Inflation Rate 1.5% in June as Food Prices Cool Down

Article excerpt

Canada's inflation rate 1.5% in June: Statcan

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OTTAWA - Canada's annual inflation rate held steady last month at a modest 1.5 per cent amid a welcomed cool-off in sizzling supermarket prices.

This headline-inflation number in Statistics Canada's latest consumer price index, which was released Friday, matched the year-over-year increase in May.

And for a second straight month, the annual core inflation rate, which excludes some volatile items such as gasoline prices, also remained stable at 2.1 per cent.

However, it was the information tucked in the report's underlying details that caught the attention of many analysts.

For example, Statistics Canada said lower fuel prices helped offset higher consumer costs for cars, electricity and air travel.

It also noted that prices related to shelter and households, such as items like furniture and appliances, registered the biggest gains of the major categories in the index.

But it was the long-awaited price deceleration at the country's grocery stores that likely brought some relief for the largest swath of consumers.

Frances Donald, senior economist for Manulife Asset Management, said except for May and June, the annual inflation rate for food had been above three per cent for 18 straight months. The climbing food prices, she added, were largely a consequence of the weakened exchange rate and other international factors.

In June, inflation for food was a much softer 1.3 per cent.

"It was a major headwind for the Canadian consumer for a year-and-a-half, and that headwind is now dissipating," Donald said in an interview.

"It's particularly important for low-income Canadian consumers who spend a larger share of their income on food."

However, she noted the price increases for food that piled up over the previous months did not unwind.

Still, the data showed significant price gains last month for several food items. Consumers paid 19.7 per cent more for apples, 7.4 per cent more for fresh or frozen fish and 5.5 per cent more for lettuce. …

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