Canada, G7 urge 'all parties' to de-escalate in growing Mideast conflict
Canada called for "all parties" to de-escalate rising tensions in the Mideast following an apparent Israeli drone attack against Iran overnight.
Canada's year-over-year inflation rate slowed to 7.6 per cent in July, with the deceleration largely driven by a decline in gas prices even as prices for food, rent and travel continued to rise.
Economists had pointed to the nearly 40-year-high of 8.1 per cent in June as a likely peak to the overall inflation rate, which had previously increased every month since June 2020.
Although gas prices rose 35.6 per cent in July compared to a year earlier, that was down from a whopping 54.6 per cent increase in June, Statistics Canada reported Tuesday. Still, Canadians are feeling the pinch from inflation as food costs were up 9.9 per cent compared with a year ago, the fastest pace since August 1981.
In a further indication that price gains are slowing, the agency said July's month-over-month increase was the smallest since December 2021.
The trend also echoes the most recent inflation data out of the United States, which saw the rate of price increases drop to 8.5 per cent in July from 9.1 per cent the previous month -- also due in large part to a drop in prices at the pump.
Americans are still absorbing bigger price increases than they have in decades, with rising prices for groceries, rental housing and medical care costs.
Tu Nguyen, an economist with accounting and consultancy firm RSM Canada, said the "pervasiveness" of inflation across the economy means there's still a ways to go before pressure on Canadians' finances eases substantially.
"It will be a while until households can breathe a sigh of relief. Wage growth continues to lag inflation, resulting in households losing purchasing power," Nguyen said in a note.
Average hourly wages rose by 5.2 per cent in July compared with a year ago.
The agency said the downward pressure on prices at the pump was due to a combination of factors, including ongoing concerns related to a slowing global economy, increased COVID-19-related public health restrictions in China and slowing demand for gasoline in the United States.
Still, inflation is well above the Bank of Canada's two per cent target.
The central bank is watching the latest reading of inflation as it gears up to make its next interest rate announcement on Sept. 7, when it is expected to raise its key rate by three-quarters of a percentage point.
Although it appears to have peaked, inflation remains too high, Bank of Canada governor Tiff Macklem said in an op-ed published by the National Post on Tuesday, emphasizing that the central bank must take action to cool things further.
"Our goal is to cool the economy enough to get inflation back to the two per cent target," he said.
"We don't want to choke off demand -- we want to slow its growth. That's what we call a soft landing. By acting forcefully in raising interest rates now, we are trying to avoid the need for even higher interest rates and a sharper slowing down the road."
The central bank is paying closer attention to the core measures of inflation, which are less volatile than the headline number -- and have remained relatively unchanged since June, said TD Chief Economist Beata Caranci.
Consumer spending has been relatively strong in Canada despite high inflation, she said, with consumer spending in the first half of the year rising at twice the pace as the U.S.
"You need the higher rates and the inflation to cause people to slow down their spending patterns, which, in fact hasn't happened to that greater degree," she said.
University of Calgary economics professor Trevor Tombe said it's unlikely that the the latest inflation data will change the Bank of Canada's plans when it comes to its next rate decision, noting there's a lag between interest rate decisions and their effect on the economy.
"They're not going to accelerate or decelerate their plans, just based on what we're seeing in this report," said Tombe. "It is important to remember, the monetary policy takes a long time to work its way through 1/8the economy 3/8."
Among food items that have gotten considerably more expensive, goods are up 13.6 per cent since last year amid higher input costs as the Russian invasion of Ukraine continues to put upward pressure on wheat prices. The prices of other food products also rose faster, including eggs, which are up 15.8 per cent, and fresh fruit, up 11.7 per cent since last year.
As mortgage costs increase with higher interest rates, the report notes rent prices are accelerating, rising faster in July than the previous month.
With more Canadians travelling during the busy summer season, airfares rose by around 25 per cent in July compared with the previous month. Traveller accommodation prices rose by nearly 50 per cent since a year ago, with the largest price increases in Ontario.
Here's what happened in the provinces (previous month in brackets):
-- Newfoundland and Labrador: 6.9 per cent (8.2)
-- Prince Edward Island: 9.5 per cent (10.9)
-- Nova Scotia: 8.7 per cent (9.3)
-- New Brunswick: 8.0 per cent (9.1)
-- Quebec: 7.3 per cent (8.0)
-- Ontario: 7.6 per cent (7.9)
-- Manitoba: 8.8 per cent (9.4)
-- Saskatchewan: 8.1 per cent (8.1)
-- Alberta: 7.4 per cent (8.4)
-- British Columbia: 8.0 per cent (7.9)
This report by The Canadian Press was first published Aug. 16, 2022.
Canada called for "all parties" to de-escalate rising tensions in the Mideast following an apparent Israeli drone attack against Iran overnight.
A Manitoba woman thought she found a miracle natural supplement, but said a hidden ingredient wreaked havoc on her health.
Hospital chaplain J.S. Park opens up about death, grief and hearing thousands of last words, and shares his advice for the living.
A woman who recently moved to Canada from India was searching for a job when she got caught in an online job scam and lost $15,000.
More money will land in the pockets of some Canadian families on Friday for the latest Canada Child Benefit installment.
The World Health Organization and around 500 experts have agreed for the first time on what it means for a disease to spread through the air, in a bid to avoid the confusion early in the COVID-19 pandemic that some scientists have said cost lives.
On Friday, the pop star released her 11th album and at 2 a.m. Eastern, she released "The Tortured Poets Department: The Anthology," featuring 15 additional songs.
American millionaire Jonathan Lehrer, one of two men charged in the killings of a Canadian couple in Dominica, has been denied bail.
Group of Seven foreign ministers warned of new sanctions against Iran on Friday for its drone and missile attack on Israel, and urged both sides to avoid an escalation of the conflict.
At 6'8" and 350 pounds, there is nothing typical about UBC offensive lineman Giovanni Manu, who was born in Tonga and went to high school in Pitt Meadows.
Kevin the cat has been reunited with his family after enduring a harrowing three-day ordeal while lost at Toronto Pearson International Airport earlier this week.
Molly Knight, a grade four student in Nova Scotia, noticed her school library did not have many books on female athletes, so she started her own book drive in hopes of changing that.
Almost 7,000 bars of pure gold were stolen from Pearson International Airport exactly one year ago during an elaborate heist, but so far only a tiny fraction of that stolen loot has been found.
When Les Robertson was walking home from the gym in North Vancouver's Lower Lonsdale neighbourhood three weeks ago, he did a double take. Standing near a burrow it had dug in a vacant lot near East 1st Street and St. Georges Avenue was a yellow-bellied marmot.
A moulting seal who was relocated after drawing daily crowds of onlookers in Greater Victoria has made a surprise return, after what officials described as an 'astonishing' six-day journey.
Just steps from Parliament Hill is a barber shop that for the last 100 years has catered to everyone from prime ministers to tourists.
A high score on a Foo Fighters pinball machine has Edmonton player Dave Formenti on a high.
A compound used to treat sour gas that's been linked to fertility issues in cattle has been found throughout groundwater in the Prairies, according to a new study.