Looks like barbecue season has been on sale this year.
Canada’s consumer price index (CPI) rose 0.2 per cent on a seasonally adjusted basis in July, one-tenth on a percentage point higher than economists’ consensus estimate. On a non-adjusted basis, it was one tick lower than expected; so let’s call it “broadly in line with expectations” and move on.
The year-over-year CPI inflation rate rose slightly, to 1.3 per cent from 1.2 per cent – again, a tenth of a percentage point below the consensus estimate, but consistent with the trend over the past three months of generally firming prices. Indeed, CPI inflation is now at its highest level in a year. The core inflation rate – which excludes the most volatile components of CPI, primarily food and energy), also rose a tick to 1.4 per cent, matching an 11-month high. It’s all more or less in line with the Bank of Canada’s inflation outlook, which pegs core inflation at a 1.3-per-cent annualized rate in the third quarter; as a result, there’s no change to the central bank’s course that sees a gradual though likely agonizingly slow rise in the core rate toward the bank’s 2 per cent target, eventually triggering an increase in the bank’s policy interest rate – though probably not for another year or so.
Since some economists are already pointing to the slightly below-expectation increases in July as evidence that inflationary pressures remain near non-existent in this country, it’s worth a closer look at where the month’s weak spots were. And peculiarly, they showed up in a couple of segments where you might expect price pressures at a time of year when backyard get-togethers are the rage: Alcohol and tobacco prices fell 0.3 per cent in the month, while food prices were down 0.1 per cent.
Keep in mind that those are seasonally adjusted numbers – so they are, essentially, factoring out the typical seasonal boost in, say, price pressures from barbecue-related demand. Still, the non-adjusted price of that critical burger ingredient, ground beef, fell 1.7 per cent in July, and beer prices fell 2.1 per cent. Perhaps it was the weak retail sales in June that sparked some discounting; but whatever the reason, we got a nice break on the cost of entertaining friends on the deck last month. (Honest, I meant to invite you over. Really.)
Here’s a quick look at price changes for some other common purchases in July:
Eggs: +0.9 per cent
Corn flakes: +1.4 per cent
Apples: +2.6 per cent
Apple juice: +1.9 per cent
Potatoes: +12.1 per cent
Tea: +1.6 per cent
Milk: -0.4 per cent
Orange juice: -2.3 per cent
Coffee (roasted): -0.3 per cent
Butter: -0.4 per cent
Peanut butter: -0.6 per cent
Cigarettes: -0.3 per cent