July CPI registers a 3.3% YoY increase, up from June’s 2.8%

Statistics Canada reports that the Consumer Price Index was up in July by 3.3%, up from the increase in June of 2.8%.

The hike in July’s Consumer Price Index (CPI) was majorly influenced by gasoline prices’ base-year effect. Excluding gasoline, the CPI saw an increase of 4.1% from June’s 4.0%.

Alberta’s Electricity Prices Skyrocket

July marked a massive 127.8% year-over-year surge in Alberta’s electricity prices. If we set aside energy from the equation, the CPI rate went down to 4.2% after a 4.4% rise in June.

Mortgage Interest Dominates the Inflation Picture

The mortgage interest cost index witnessed another record with a 30.6% year-over-year growth, becoming the most significant inflation contributor. Excluding mortgage interest costs, the all-items index increased 2.4% in July.

July’s Monthly CPI Growth

Driven largely by the peak travel month, the monthly CPI saw a 0.6% ascent in July, up from June’s 0.1%. Adjusting for seasonal factors, July’s CPI underwent a 0.5% increase.

Energy’s Mixed Scenario in July

• Gasoline Prices: There was a 12.9% drop YoY in July, following June’s 21.6% decrease. This was tied to a base-year effect, as prices were mostly stagnant from June to July 2023.
• Electricity Prices Surge: Alberta’s electricity prices in July 2023 saw an accelerated year-over-year growth of 127.8%, attributed to high demand and the end of policy interventions from early 2023.
• Natural Gas Slows Down: Natural gas prices decreased by 15.7% YoY in July 2023, influenced by a base-year effect in Ontario from July 2022.

A Decline in Travel-Related Services Compared to 2022

With most public health measures lifted by the previous summer post-COVID-19, July 2023 saw a slowdown or decline in prices for travel-related services:

• Accommodations: 4.2% rise in July YoY, compared to June’s 12.9%.
• Travel Tours: Decreased by 1.2% in July, down from June’s 6.8% rise.
• Airfares: Dropped by 12.7% from the previous July.

Grocery Prices: A Slower YoY Growth

If there is a bit of good news for consumers, the increase in the price of groceries in July slowed slightly from June.

July’s grocery prices, while still high, showed a reduced YoY pace with an 8.5% growth, down from June’s 9.1%.

While prices for groceries remained elevated, they grew at a slower pace year over year, rising 8.5% in July after a 9.1% increase in June. Slower price growth was due mainly to prices for fresh fruit and, to a lesser extent, bakery products.

Prices for fresh fruit rose 4.1% in July, following a 10.4% increase in June. The deceleration was driven by the largest month-over-month decline (-6.5%) since February 2008. This decline was largely a result of lower monthly prices for grapes (-40.9%) and oranges (-1.8%).

Fresh fruit and bakery products primarily influenced this deceleration:

• Fresh Fruit: Increased 4.1% in July, down from June’s 10.4%, influenced majorly by dropping grape and orange prices.
• Bakery Products: Witnessed a 9.8% rise YoY in July, a reduction from June’s 12.9% spike.

Political Reaction – Conservatives Pounce on Liberals over Increase

“After Trudeau’s Finance Minister declared mission accomplished on inflation, Statistics Canada has proven that Trudeau’s policies continue to increase the cost of everything. It goes to show how out of touch he is to the suffering of Canadians,” said Jasraj Singh-Hallan, Conservative Shadow Minister for Finance. “Only Conservatives will bring home lower prices by axing Trudeau’s taxes on gas and groceries and ending inflationary Liberal deficits.”

The Conservatives state that “After declaring victory in July, it’s now clearer than ever that the Trudeau Liberals have failed to bring home lower prices for Canadians. Inflation has again risen to 3.3 percent, and the cost of groceries has gone up by 8.5 percent since last year. The price of housing also continues to skyrocket, with mortgage costs up by over 30 percent. Just ten days ago, the Trudeau Liberals claimed they were ‘making real progress,’ but struggling Canadians are still feeling the pain”.