Canada July CPI Rises To 1.2% Y/Y From 1.0% in June>

--Seasonally adjusted, July CPI M/M +0.2% After No Change In June

By Courtney Tower 

     OTTAWA (MNI) - Canadian inflation rose by two notches in July to 

1.2% on an annual basis, which analysts had expected, while the 

preferred measures of core inflation also ticked up, Statistics Canada 

reported Friday. 

     Analysts surveyed by MNI had expected the July increase to 1.2% on 

an annual basis from 1.0% in June, and the Bank of Canada will be 

heartened to see inflation finally rising. This was the first increase 

in CPI since February's 2.0% declined from 2.1% in January. 

     The Bank of Canada's core readings of inflation were 1.4% for the 

common measure, the same as in June, 1.7% for CPI-median (1.6% in June), 

and 1.3% (1.2% in June) for CPI-trim. 

     With the overall index rising from being flat in June, key July 

features were that energy dropped 0.6% (+0.3% year-over-year). CPI 

excluding food and energy was flat on the month, and up 1.5% on the 

year. The gasoline index was up 0.2% (+4.6% year-over-year). 

     Overall, the goods sector dropped 0.2% in July (+0.1% 

year-over-year), and services products gained 0.1% (+2.1% 

year-over-year). 

     Prices were up in six of the eight major components of the CPI 

index, with transportation (+1.9%) and shelter (+1.3%) contributing the 

most to the annual increase. 

     Household operations, furnishings and equipment, and clothing and 

footwear, both down 0.1% year-over-year, were the two sectors to show 

declines. 

     The decline in household operations was its first drop since August 

of 2006 and was largely due to a drop in purchases of furniture (-2.9%). 

Prices for both men's and women's clothing declined, but less on a 

year-over-year basis than in June. 

     With the transportation sector up 1.9% year-over-year in July 

following a 0.6% increase in June, the big contributor was gasoline 

prices, rising 4.6%. The purchase of passenger vehicles, so important 

for the Canadian economy, came back in July to a 0.2% increase 

year-over-year after a 0.2% decline in June. 

     The shelter index rose mostly on homeowners' replacement costs, 

+4.6% year-over-year. 

     Consumer prices for food rose 0.6% on the year, while health and 

personal care was up 2.2%, its largest gain since May 2011. 

     On a monthly basis, seasonally adjusted, five major components 

increased, two decreased and one, recreation, education and reading, was 

unchanged. Clothing and footwear (+0.5%) showed the largest gain and 

household operations, furnishings and equipment (-0.2%) showed the 

largest decline. 

     All items excluding food and energy showed a 0.2% increase, 

matching the one in June. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com

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