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

Questions around rail safety, firefighter safety, cleanup near the rail yards and tracks, whistle cessation, etc were raised during the RDBN meeting with CN. (File photo)
‘Lot of our concerns are still not being heard,’ say RDBN directors on CN’s response

Frustrated over lack of solutions, despite communicating their concerns to CN

Barbara Patrick. (Submitted/Lakes District News)
Former Burns Lake local to play the first Indigenous character in a Hallmark movie

Barbara Patrick, a former LDSS student takes a huge step for the Indigenous community

The Burns Lake RCMP is supportive of having a ticketing bylaw in place even though there would be limitations on what they could ticket on. (Priyanka Ketkar photo/Lakes District News)
Burns Lake might be getting a ticketing bylaw

Will help extend RCMP’s authority to attend to noise complaints

A B.C. Ambulance Service paramedic wearing a face mask to curb the spread of COVID-19 moves a stretcher outside an ambulance at Royal Columbia Hospital, in New Westminster, B.C., on Sunday, November 29, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. records deadliest weekend of COVID-19 pandemic with 46 deaths; more than 2,300 cases

Provincial health officer Dr. Bonnie Henry provides COVID-19 update

THE CANADIAN PRESS/Nathan Denette
B.C. researchers launch study to test kids, young adults for COVID-19 antibodies

Kids and youth can often be asymptomatic carriers of the novel coronavirus

Paramedics register patients at a drive through, pop-up COVID-19 test centre outside the Canadian Tire Centre, home of the NHL’s Ottawa Senators, in Ottawa, Sunday, Sept. 20, 2020. A new poll suggests most Canadians aren’t currently worried that people in other countries might get a COVID-19 vaccine first. THE CANADIAN PRESS/Justin Tang
Canadians not worried other countries will get COVID-19 vaccine first: poll

Forty-one per cent of respondents say they want the vaccine to be mandatory for all Canadians

Fossil finds at Mt. Stephen. (Photo: Sarah Fuller/Parks Canada)
Extreme hiking, time travel and science converge in the Burgess Shale

Climb high in the alpine and trace your family tree back millions of years – to our ocean ancestors

Kettle bells sit aligned in an indoor fitness studio. (PIxabay.com)
1 COVID-19 case at a B.C. fitness studio leads to 104 more infections, 6 school exposures

According to case data released by Fraser Health, one case of the novel coronavirus carries a big impact

Vehicles drive past a display thanking essential workers in Burnaby, B.C. on Sunday, Nov. 29, 2020. THE CANADIAN PRESS/Marissa Tiel
B.C. changing COVID-19 case reporting as virus spread continues

Manual counting takes more time, leads to errors

Black Press Media and BraveFace have come together to support children facing life-threatening conditions. Net proceeds from these washable, reusable, three-layer masks go to Make-A-Wish Foundation BC & Yukon.
Put on a BraveFace: Mask fundraiser helps make children’s wishes come true

From Black Press Media + BraveFace – adult, youth and kid masks support Make-A-Wish Foundation

Christy Jordan-Fenton is the co-author of the book Fatty Legs, which has been mentioned amid the controversy of an Abbotsford school assignment on residential schools.
Co-author of residential schools book condemns controversial Abbotsford class assignment

Children’s book mentioned amid controversy at W. A. Fraser Middle School

Kootenay East MLA Tom Shypitka takes over as energy and mines critic for the B.C. Liberal opposition. Kelowna-Lake Country MLA Norm Letnick (right) moves from health critic to assistant deputy speaker. (Hansard TV)
B.C. Liberals pick critics to take on Horgan’s NDP majority

Interim leader Shirley Bond takes seniors, long-term care

Most Read