Canada\u0027s consumer price index showed inflation was slightly cooler in July. Here is what the economists said about it
With core measures reaching a record 5.3 per cent in July and the agency warning that inflation remains broad-based, economists and business leaders say that the Bank of Canada’s mission to bring inflation back down to a two-per-cent reading is far from over. Here’s what the street had to say:“The dip in the headline rate was entirely accounted for by lower gasoline prices, which dropped to around $1.
“It’s not unreasonable to expect the headline CPI rate, together with the breadth of inflation pressure to be turning a corner. But the pace of inflation is still far above the Bank of Canada’s comfort zone and consumer demand will likely need to soften a lot more for CPI growth to fully and sustainably return to the central bank’s one per cent to three per cent target range.”75 basis points in September; a policy rate of 3.5 per cent by the end of the year.
“This report is clearly a step in the right direction, but the journey is many miles… Yes, we may finally be past the peak of inflation — provided oil prices don’t run wild again — but it is likely to remain very sticky at close to eight per cent through the second half of this year before truly breaking lower in 2023.”Royce Mendes, managing director and head of macro strategy at Desjardins:
“Canadians looking at today’s consumer price data will be breathing a sigh of relief. For the first time since June 2021, the annual rate of inflation stands lower than it was in the prior month… It’s looking more and more like inflation will undershoot the Bank of Canada’s forecast for the third quarter of 8.0 per cent.”Article content
“But this is no time to get complacent. The 9.2 per cent decline in gasoline prices did a lot to blunt price growth in other areas… Excluding food and energy, prices rose 0.5 per cent in seasonally-adjusted terms in July, leaving the annual rate of that stripped down measure of inflation running at 5.5 per cent and the three-month annualized rate at 6.4 per cent. The average of the Bank of Canada’s three core measures also jumped up to 5.3 per cent, the highest on record.
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