Canadian consumer prices rose 0.3 per cent in July, bringing the annual inflation rate to 1.7 per cent. While the headline figure looks tame, core inflation remains sticky, with the Bank of Canada’s two preferred measures – median and trim – holding around 3 per cent for the fourth consecutive month.
Median prices rose 3.1 percent year-over-year (up from 3.0 percent in the prior month, which was revised down by a percentage point), while trim prices rose 3.0 percent, unchanged from June. Monthly increases in core measures have remained moderate in recent months – at about 0.2 percent – which has helped push the three-month annualized rate of change down to 2.4 percent from 3 percent.
While this moderation is positive, more than 40 per cent of CPI components continue to rise at more than 3 percent year-over-year, above the top end of the Bank’s target band. Rent and mortgage interest costs remain elevated: rent prices rose at a faster pace year-over-year, up 5.1 percent in July following a 4.7 per cent increase in June, while mortgage interest costs rose 4.8 per cent year-over-year, down from 5.6 per cent in June. Trade-war effects can be seen in durable goods prices, which rose 2.9 per cent year-over-year, led by a 4.5 per cent rise in vehicle prices.
Overall, the data support the Bank of Canada’s view in the most recent Monetary Policy Report that underlying inflation is near 2.5 per cent. If the recent trend in core inflation persists and the economy remains soft, the Bank could have some room to cut rates in the future. For now, it looks like the Bank is on hold.
Housing Affordability Watch
CMI monitors the latest developments and offers insights on solutions to Canada’s housing affordability crisis
Builders’ Pre-Budget Proposal Under Review
The Large Urban Centre Alliance of developers has put forward a set of housing recommendations ahead of the federal pre-budget consultations. In Part 1 of our two-part review, we examine the primary recommendations, including GST/HST rebates, development charges, the foreign buyer ban, and CMHC’s Apartment Construction Loan Program (ACLP) program.
Read the full analysis here in the latest Housing Affordability Watch: Reviewing the Builder Alliance Pre-Budget Proposal: Part One – Primary Recommendations
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