Blockade briefly stops Pride Parade in downtown Winnipeg
A group of protesters briefly blocked the Winnipeg Pride Parade on Sunday.
Inflation in Canada is cooling faster than expected, but economists don't expect the Bank of Canada to back down from its fight just yet.
The annual inflation rate slowed to 7.0 per cent in August, Statistics Canada said Tuesday in its latest monthly consumer price index (CPI) report.
Prior to the release of the report, RBC forecast inflation in August was 7.2 per cent.
The slowdown was largely driven by the price of gasoline falling, however, Canadians are still feeling the pinch at the grocery store. Food prices rose at the fastest rate since 1981 in August, with prices up 10.8 per cent compared with a year ago.
Excluding gasoline prices, year-over-year inflation was 6.3 per cent, making August the first month since June 2021 where annual inflation excluding gasoline has slowed.
"This is about as good of an inflation report as we can hope for," said BMO's managing director of Canadian rates and macro strategist Benjamin Reitzes in an email to clients.
The Bank of Canada will be paying close attention to its preferred measures of core inflation, which tend to be less volatile and help the bank see through temporary changes in the consumer price index. Those measures all point to a slowdown in annual inflation in August as well.
Randall Bartlett, senior director of Canadian economists at Desjardins, said while the latest numbers are good news, the Bank of Canada will likely continue down the path of higher interest rates.
"We don't think this report suggests that the Bank of Canada is close to calling mission accomplished yet," he said. "But it certainly is good news, and suggests that inflation is heading in the right direction."
The Bank of Canada has been laser-focused on bringing down inflation expectations, which were elevated in recent surveys. If people's expectations start coming down, Bartlett said that may influence the bank's future rate decisions and general tone on inflation.
Earlier this month, the Bank of Canada raised its key interest rate for the fifth time this year. With the three-quarters of a percentage point hike, the bank's key rate now sits at 3.25 per cent.
The bank is set to make its next rate announcement on Oct. 26 and has warned more interest rate hikes are needed to bring inflation to its two per cent target.
TD is expecting the Bank of Canada to hike rates again in October and bring its key rate to four per cent by the end of the year.
The latest report on inflation also shows the gap between inflation and wages is narrowing, with average hourly wages up 5.4 per cent in August compared with 7.0 per cent inflation.
Despite the slowdown in headline inflation, the cost of living remains stubbornly high for Canadians.
On a monthly basis, overall consumer prices were slightly lower in August than in July.
Statistics Canada said the 0.3 per cent decline in the CPI from July to August is the largest monthly decline since the early months of the pandemic.
As grocery prices soared in August, prices for bakery goods were up 15.4 per cent while prices for fresh fruit was 13.2 per cent higher than a year ago.
Statistics Canada attributes the acceleration in food prices to continued supply chain disruptions, the Russian invasion of Ukraine, extreme weather, and higher input costs.
As for the slowdown in overall inflation, the federal agency said transportation and shelter prices drove the deceleration in consumer prices.
Gas prices were up 22.1 per cent in August compared with a year ago, but down 18.8 per cent since June.
Shelter costs fell slightly from July to August, but remained 6.6 per cent higher than a year ago.
Here's what happened in the provinces (previous month in brackets):
The agency also released rates for major cities, but cautioned that figures may have fluctuated widely because they are based on small statistical samples (previous month in brackets):
This report by The Canadian Press was first published Sept. 20, 2022
A group of protesters briefly blocked the Winnipeg Pride Parade on Sunday.
Research shows that art experiences, whether as a maker or a beholder, transform our biology by rewiring our brains and triggering the release of neurochemicals, hormones and endorphins.
Ryan Reynolds this week unveiled arguably the most anticipated and sure-to-be coveted merchandise tied to his upcoming 'Deadpool' sequel: the movie’s novelty popcorn bucket.
Former U.S. president Donald Trump said he is 'OK' with serving potential jail time or being under house arrest following his historic conviction on 34 felony counts of falsifying business records.
A brief break during Wednesday's city council meeting in Saskatoon nearly cost the city dearly.
During the pandemic, the Ontario government started to hand out cash to parents to help offset the cost of at-home learning while schools were shuttered.
Eight people, including four children, have second- or third-degree burns as a result of an incident at a home in Saint-Constant, Que. south of Montreal, the Coopérative des techniciens ambulanciers de la Montérégie (CETAM) reported on Saturday.
Media magnate Rupert Murdoch, 93, has married for the fifth time, his corporation, News Corp, confirmed Sunday.
South Korea said Sunday it’ll soon take retaliatory steps against North Korea over its launch of trash-carrying balloons across the border and other provocations.
Car 14 is a luxury passenger car that once made regular runs from London to Port Stanley starting in 1917.
A hefty donation by a renowned local activist to the University of Winnipeg has created what is believed to be the most comprehensive two-spirit archives in all of Canada.
Leanne Van Bergen discovered a skulk of 10 baby foxes, and two mothers, had made themselves at home on her property in Beausejour.
An 81-year-old Waterloo, Ont. woman thought she’d never ride a horse again after a brain bleed led to severe physical complications.
A CP24 camera caught the moment a driver frantically got out of her car as it was being dragged by a truck on Avenue Road Wednesday afternoon.
Prince Edward Island is celebrating its first-ever International Day of Potato on Thursday.
The president of Covered Bridge Chips in New Brunswick is hoping to have his factory rebuilt for late 2025 following a devastating fire last year.
Students and staff at Winnipeg’s Westwood Collegiate had a unique problem to solve this month; how do you lead ducks to water from the school’s courtyard when 12 of them can’t fly yet?
Debby Lorinczy remembers her father as an amazing person and as a man who also made an amazing discovery.