Residential Market Commentary -Inflation eases slightly

  • First National Financial LP
The Canadian economy has recorded a small victory in the ongoing fight against the rising cost of living.
 

Statistics Canada reports headline inflation, also known as the Consumer Price Index (CPI), dipped slightly in July to 1.7%.  That is down from 1.9% in June.  Much of that decline is attributed to lower gasoline prices, resulting from the removal of the consumer carbon tax.

The growth of mortgage interest costs also continued to ease in July, rising by 4.8% year-over-year.  That is down from a 5.6% year-over-year increase in June.  However, natural gas prices and rent drove up overall shelter costs by 3.0%. 
 
Core inflation, which is the Bank of Canada’s preferred measure of price increases, remains elevated.  It is hovering around 3.0%, which is the upper limit of the Bank’s desired range for inflation.  However, many economists note that the measures of core inflation did drop slightly in July.  They point out that the longer-term trend for core inflation has it running comfortably within the BoC’s 1.0% to 3.0% target range.
 
Those economists also say it is unlikely the July inflation report will have a serious influence on the Bank of Canada’s next interest rate setting on September 15.  Several other economic reports will arrive before then and the ongoing tariff turmoil coming out of the United States continues to spread uncertainty in Canada and around the world.

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