Inflation Lower in July in Canada 2012

in Bank of Canada, Inflation, Stats Canada

Inflation moderated a little in July where the year over year rate was 1.3%, blamed mostly on new cars, restaurant food, meat, and electricity (a very eclectic blend of things in our lives), Stats Canada published with their Monthly Inflation Report for July 2012.

As can be seen from the following graph, the rate of increase is moderating, but it still continues to be positive, but for now well below 2.0% ( a magic level for the Bank of Canada).

12 Month CPI Rate for the Past Little While

The only place we are seeing a drop in price is footwear and clothing. The one area to watch closely is pointed out by our Stats Canada friends:

Food prices rose 2.1% in the 12 months to July following a 2.0% advance in June. These two increases were the lowest year-over-year gains in food prices since the beginning of 2011. Leading the July increase were higher prices for food from restaurants (+2.4%), meat (+5.3%) and cereal products (+3.7%). In contrast, prices for fresh vegetables declined for the fifth consecutive month.

This is worrisome given that most of eastern Canada is in a Level 2 drought, which will mean higher prices for food. We are already hearing that Apple production is down, and even with the rain that is finally arriving, it may not be enough.

CPI Index for the Past Little While

A slight dip in this graph is better news, but will the downward trend continue?

Bank of Canada’s core index

Remember that the Bank of Canada has their own way of measuring inflation, thus this month it is higher, but still under the magical 2.0% threshold:

The Bank of Canada’s core index rose 1.7% in the 12 months to July, following a 2.0% gain in June.

On a monthly basis, the seasonally adjusted core index was unchanged in July for the second consecutive month.

The Big Table

Here is one of the 3 Big tables published by Stats Canada, have a look at all of them:

Consumer Price Index and major components, Canada – Not seasonally adjusted

Relative import1July 2011June 2012July 2012June to
July 2012
July 2011
to July 2012
%(2002=100)% change
All-items Consumer Price Index (CPI)100.002120.0121.6121.5-0.11.3
Household operations, furnishings and equipment11.55110.7113.1113.0-0.12.1
Clothing and footwear5.3189.790.589.1-1.5-0.7
Health and personal care4.95116.7118.9118.5-0.31.5
Recreation, education and reading11.20106.8106.7107.20.50.4
Alcoholic beverages and tobacco products2.91136.1137.5137.60.11.1
Special aggregates
Core CPI382.15117.3119.4119.3-0.11.7
All-items CPI excluding energy89.92117.0118.8118.7-0.11.5
All-items CPI excluding food and energy73.93114.3116.2115.8-0.31.3
1. 2009 CPI basket weights at April 2011 prices, Canada, effective May 2011. Detailed weights are available under the Documentation section of survey 2301 (
2. Figures may not add to 100% as a result of rounding.
3. The Bank of Canada’s core index excludes eight of the Consumer Price Index’s most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies) as well as the effects of changes in indirect taxes on the remaining components. For additional information on the core CPI, please consult the Bank of Canada website (
4. The special aggregate “Energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.


  • Joe August 20, 2012, 9:36 AM

    Here’s hoping that this is the first sign of asset deflation. The Canadian housing bubble certainly appears to have begun imploding.

    • bigcajunman August 21, 2012, 2:53 PM

      Guess I’ll hold onto my house for a while longer… then again, I bought it 15 years ago, it’s already worth much more than I paid for it (even in a depressed market).


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