The all-items year-over-year increase in July was 2.5 per cent, up from a 1.9 per cent increase in June. Over the last twelve months, Alberta’s inflation rate has averaged 2.2 per cent, very close the Bank of Canada’s 2.0 per cent target for the entire Canadian economy.
Canada’s inflation rate moved in the opposite direction, falling from an annual increase of 2.4 per cent in June to 2.1 per cent last month. The core inflation rate—which strips out the most volatile components of the index to get a better read on where true price pressures are—rose 1.7 per cent in the 12 months leading up to July, after increasing 1.8 per cent in June.
Alberta’s inflation was led by significant gains in natural gas home heating costs, which jumped 41.8 per cent year-over-year. Natural gas prices have been particularly volatile for Alberta consumers over the last year. Other increases were noted in the price of home and mortgage insurance (+14.8 per cent) and fresh fruit (+11.5 per cent). Prices were lower compared to last year for electricity (-17.6 per cent) and public transportation (-1.0 per cent).
Today’s inflation report will do little to change the Bank of Canada’s belief that there is still plenty of slack in the Canadian economy and that price pressures at the consumer level are not strong.