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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Carmen Hintz (right) donates $500 to Heather Smith (left) at the Kimberley Food Bank, leftover cash after fundraising to rescue four kittens. Paul Rodgers photo.
Local’s extra kitten fundraiser money donated to Kimberley Food Bank

Carmen Hintz donates $500, after raising money to support rescued cats

Ryder and Cohen of Kimberley Minor Hockey can play on with new mandates from the Provincial Health Officer. Photo submitted.
Kimberley Minor Hockey president hopes to see curve flatten for a return to hockey

New COVID-19 orders put in place by the government last week stated… Continue reading

Masks are now officially mandatory in all City of Campbell River facilities. (Black Press File Photo)
Interior Health reports 49 new COVID-19 cases overnight

302 cases remain active; two in hospital

Smoothing out the walking path near the roof extension at Centre 64. Photo submitted
BC Rehab sponsored Accessibility Project completed at Centre 64

Work continues on making the Arts Centre accessible to all

Sgt. Steven Woodcox began work as the new Kimberley RCMP detachment commander on Monday, Nov. 23. Photo submitted.
Kimberley RCMP welcomes new detachment commander

Sgt. Steven Woodcox has first day on the job in Kimberley

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, Nov. 23, 2020. (B.C. government)
B.C. daily COVID-19 cases hits record 941 on Tuesday

Further restrictions on indoor exercise take effect

Prime Minister Justin Trudeau speak to the media about the COVID-19 virus outside Rideau Cottage in Ottawa, Friday, Nov. 20, 2020. THE CANADIAN PRESS/Adrian Wyld
Canada’s inability to manufacture vaccines in-house will delay distribution: Trudeau

First doses of COVID-19 vaccine expected in first few months of 2021, prime minister says

Beaver Creek RCMP Cpl. Robert Drapeau, left to right, Gary Bath, Lynn Marchessault, Payton Marchessault, Rebecca Marchessault and Tim Marchessault pose in this recent handout photo near the Canada-U.S. border crossing near Beaver Creek, Yukon. A family reunion trip for the woman from Georgia that left them stranded ended on a bright note when Bath drove them to the Alaskan border following an appeal for help. THE CANADIAN PRESS/HO, Gary Bath *MANDATORY CREDIT*
Help from B.C. man allows American family to reunite in Alaska

Lynn Marchessault drove from Georgia to the Alaska border to join her husband, who serves in U.S. military

(Pixabay.com)
Man, 28, warned by Kootenay police to stop asking people to marry him

A woman initially reported the incident to police before they discovered others had been popped the question

Winston Blackmore (left) and James Oler (right) were sentenced on separate charges of polygamy this week in Cranbrook Supreme Court.
No more charges expected in Bountiful investigation, special prosecutor says

Special prosecutor says mandate has ended following review of evidence from Bountiful investigations

(Ashley Wadhwani/Black Press Media)
Refuse to follow B.C.’s mask mandate? Face a $230 fine

Masks are now required to be worn by all British Columbians, 12 years and older

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

BC Teachers' Federation President Teri Mooring is asking parents of school-aged children to encourage the wearing of masks when possible in schools. (THE CANADIAN PRESS/Chad Hipolito)
LETTER: Teachers union encourages culture of mask wearing in B.C. schools

BCTF President Teri Mooring asks parents to talk with children about wearing masks in school

(Pixabay)
All dance studios, other indoor group fitness facilities must close amid updated COVID-19 rules

Prior announcement had said everything except spin, HIIT and hot yoga could remain open

Most Read