tatistics Canada building and signs are pictured in Ottawa on Wednesday, July 3, 2019. THE CANADIAN PRESS/Sean Kilpatrick

tatistics Canada building and signs are pictured in Ottawa on Wednesday, July 3, 2019. THE CANADIAN PRESS/Sean Kilpatrick

Statistics Canada says annual inflation rose 0.7% in June as pandemic restrictions eased

Uptick follows two months of negative inflation due to pandemic

Statistics Canada says the consumer price index for June was up 0.7 per cent compared with one year ago, ending a run of negative inflation that began in April in the wake of the COVID-19 pandemic.

The consumer price index had registered two months of negative readings leading up to June, first with 0.2 per cent annualized decline in April, then a further 0.4 per cent drop in May.

The average economist estimate from data firm Refinitiv forecasted an annualized inflation rate of 0.3 per cent for the month.

The turnaround from May to June matched the fastest acceleration in the headline inflation reading since March 2011.

Fuelling the rise was an increase in clothing and footwear after two months of declines as brick-and-mortar stores were closed due to COVID-19.

Gasoline prices edged up as more people were on the road after businesses and public services gradually reopened, and what the agency called a general increase in local travel during June.

READ MORE: Mortgage defaults after COVID-19 could look different than 2008, says economist

Statistics Canada says that excluding gasoline, the consumer price index rose 1.2 per cent in June.

CIBC senior economist Royce Mendes says the increase in business activity across the country as restrictions ease led to a rebound in prices. In a note, he says inflation should remain in positive territory as the economy continues to reopen.

“While any fears of deflation appear premature at this point, the economy will likely only be generating modest rates of inflation even with some supply-chain disruptions,” he writes.

The Bank of Canada forecast last week that annual inflation will be 0.6 per cent this year and vowed to maintain its key interest rate at the effective lower bound of 0.25 per cent until inflation hits its two-per-cent target.

Statistics Canada reports that mortgage interest costs fell for the second consecutive month, this time by 0.3 per cent, partly due to declining bond yield and the central bank’s rapid rate cut in March.

The agency says prices rose the most in Alberta compared to June 2019 when commodity prices fell and the provincial government eliminated a carbon tax. Year-over-year price growth was the weakest in the Atlantic provinces, held down by low prices for furnace fuel oil that is more commonly used in the region.

In Ontario, electricity prices rose 17.2 per cent on a month-over-month basis, the largest monthly increase since May 2003, Statistics Canada says. The agency attributes the change to higher prices kicking in June 1 in the province after the Ford government reduced fees in March as people were ordered to stay home to slow the spread of COVID-19.

Shifts in consumer behaviour have thrown off the headline consumer price index, which Statistics Canada said would have shown annualized readings of 0.0 per cent in April and -0.1 per cent if it better reflected pandemic spending.

The agency did not include an inflation reading under the experimental price index Statistics Canada created with help from the central bank.

The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

economy

Just Posted

COVID-19 virus. (Black Press Media file)
COVID-19 outbreak declared over at Kelowna retirement home

The outbreak at Sandalwood Retirement Resort was initially announced by Interior Health on April 23

City of West Kelowna. (Phil McLachlan - West K News)
City of West Kelowna approves funding application for outreach program

The program would support the community’s most vulnerable and those experiencing homelessness

The wildfire season in the Okanagan Valley region has been approached with greater apprehension and concern from area residents since the historic Okanagan Mountain Park fire in 2003. That fire burned 25,600 hectares, forced evacuations in Kelowna and Naramata impacting more than 33,000 people, destroyed 238 homes, and claimed 12 wooden trestles and damaged two other steel trestles in Myra Canyon. (File photo)
Ominous wildfire outlook if June rains don’t return to Okanagan

Dry spring is fueling potential for busy wildfire season in July and August

Joe Rich residents want logging operations in the area to stop for now until they get more clarity on slope stability and risks to the Mission Creek watershed. (Twila Amato/Black Press Media)
Joe Rich logging poses watershed risk: residents

Area residents want the logging to stop in the area for the time being

Kelowna Law Courts. (Michael Rodriguez/Capital News)
Former Vernon teacher found guilty of historic sex crimes against minors

Anoop Singh Klair was found guilty of all eight charges against him in a Kelowna courtroom on Friday

Daily confirmed COVID-19 cases reported to B.C. public health, seven-day rolling average in white, to May 12, 2021. (B.C. Centre for Disease Control)
B.C. preparing ‘Restart 2.0’ from COVID-19 as June approaches

Daily infections fall below 500 Friday, down to 387 in hospital

Sinikka Gay Elliott was reported missing on Salt Spring Island on Wednesday, May 12. (Courtesty Salt Spring RCMP)
Body of UBC professor found on Salt Spring Island, no foul play suspected

Sinikka Elliott taught sociology at the university

KCR Migrant Support Worker, Javier, had an exciting day escorting his son Ian with him during ‘Take your Child to Work Day’!
KCR: Volunteering is being part of a whole

KCR Community Resources shares stories of its volunteers in a weekly column

The first Black judge named to the BC Supreme Court, Selwyn Romilly, was handcuffed at 9:15 a.m. May 14 while walking along the seawall. (YouTube/Screen grab)
Police apologize after wrongly arresting B.C.’s first Black Supreme Court Justice

At 81 years old, the retired judge was handcuffed in public while out for a walk Friday morning

Doctor Jessica Luksts is being recognized on BC Family Doctor Day for her part in the early days of the pandemic. (Submitted)
Celebrate BC Family Doctor Day on May 19

The South Okanagan Similkameen has over 80 family doctors serving the community

Dr. Steve Beerman, of Nanaimo, shows off his Dr. David Bishop Gold Medal, awarded for distinguished medical service. (Karl Yu/News Bulletin)
Queen presents Vancouver Island doctor with award for global drowning prevention

Dr. Steve Beerman receives Royal Life Saving Society’s King Edward VII Cup at virtual ceremony

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Tim Miller is selling his 76-foot steel bridge from his property in Burton, B.C. The bridge originates from the railway in Revelstoke. (Contributed)
For sale: a 100-ton 19th century bridge from Revelstoke

Bridge is now in Burton, B.C. and advertised for $40,000

Former UFV Cascades wrestling coach Arjan Singh Bhullar is now the ONE heavyweight champion after defeating Brandon Vera via TKO in round two on Saturday in Singapore. (ONE Championship)
Former UFV wrestling coach wins MMA championship

Arjan Singh Bhullar captures ONE heavyweight title, first Indian origin fighter to achieve honour

Most Read