The price of groceries continued to climb in July, even as the broader Canadian inflation rate moderated.
A Statistics Canada’s consumer price index on Tuesday pegged the July inflation rate at 7.6%, down from the near four-decade high of 8.1% notched in June. It was the first month-over-month decline in the inflation rate in a year. However, prices for food purchased from stores were up 9.9% in July, compared to the 9.4% advanced posted in June.
Prices for bakery products (+13.6%) continued to rise at a faster pace as wheat prices remained elevated, StatsCan said. Higher input costs and global supply uncertainty related to the Russian invasion of Ukraine continued to put upward pressure on global wheat prices amid an already constrained supply.
Other food items also exhibited faster price growth, including non-alcoholic beverages (+9.5%), sugar and confectionery (+9.7%), preserved fruit and fruit preparations (+10.4%), eggs (+15.8%), fresh fruit (+11.7%), and coffee and tea (+13.8%).
The decline in the July inflation rate from June was the result of slower year-over-year growth in gasoline prices. Consumers paid 9.2% less for gasoline in July compared with the previous month, the largest monthly decline since April 2020. Excluding gasoline, prices rose 6.6% year over year in July, following a 6.5% increase in June, as upward pressure on prices remained broad-based.
“Ongoing concerns related to a slowing global economy, as well as increased COVID-19 pandemic public health restrictions in China and slowing demand for gasoline in the United States led to lower worldwide demand for crude oil, putting downward pressure on prices at the pump,” StatsCan said.
The weaker inflation rate for July was largely expected by analysts but remains well above the Bank of Canada’s target of around 2%. After hiking its overnight lending rate by a full percentage point last month to 2.5%, the Bank of Canada is still expected to continue hiking rates in a bid to tame inflation.
Source: DePutter Publishing Ltd.
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