Newspaper article The Canadian Press

Canadian Inflation Perks Up for First Time since January, Hits 1.2% in July

Newspaper article The Canadian Press

Canadian Inflation Perks Up for First Time since January, Hits 1.2% in July

Article excerpt

Inflation picks up steam, hits 1.2% in July

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OTTAWA - The annual inflation rate accelerated last month for the first time since January for a result that supported the view consumer prices are set to rise with the improving economy.

Statistics Canada's latest inflation report, released Friday, found that higher gasoline prices in July helped the year-over-year rate pick up its pace to 1.2 per cent. This was an increase from June's reading of one per cent, which was inflation's lowest mark in almost two years.

While still below the Bank of Canada's ideal inflation target of two per cent, the July number supported the bank's expectations that the softness was mostly temporary.

Analysts said Friday's inflation report reinforced widely held expectations that the central bank will hike its benchmark interest rate again this fall.

"Earlier this year, there was a discrepancy -- inflation data with the strong economy," said Matthieu Arseneau, a National Bank senior economist.

"But there's always a lag. Inflation reacts with a couple of quarters of lag, so we're seeing an improvement on that front."

Citing the healthier-than-expected economy, the central bank raised its trendsetting rate last month for the first time in nearly seven years, to 0.75 per cent from 0.5 per cent.

Before the July policy decision, some experts had suggested the central bank might hold off boosting its rate because of weak inflation since the start of 2017. The annual rate peaked in January at 2.1 per cent.

Statistics Canada's report Friday also found that two of the central bank's three measures for core inflation, which omit volatile items like gas, saw slight increases in July for the second straight month. …

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