Canada's rate of inflation slowed in July, dipping to 7.6%, down from the 40-year high of 8.1 recorded in June..The welcome news comes from Statistics Canada, which says the decline was driven by lower gasoline prices..The federal agency says gas price growth slowed in July compared to June, rising by 35.6% on a yearly basis in July compared with 54.6% the previous month..The slower rate of growth was attributed to a lower demand for crude oil, due to the slowing global economy, heightened COVID-19 restrictions in China, and smaller demand for gasoline in the United States, said the StatsCan report..A surge in food prices, however, held back the month-over-month decline..Food prices at grocery stores spiked by nearly 10% on a yearly basis in July, spurred largely by higher prices for bakery goods, up 13.6% year-over-year; eggs, up 15.8%; and fresh fruit, up 11.7%..The slowing of the rate of inflation mirrors the latest information from the US, where the annual rate of inflation slowed to 8.5% in July, down from 9.1% in June. US authorities also credit the decline to lower gasoline prices, as well as reduced demand and lower prices for commodities such a wheat and lumber, and lower shipping costs..The lower inflation rate in Canada will no doubt have some economists questioning what the Bank of Canada’s next rate announcement on Sept. 7 will reveal..Even at July’s level, the overall inflation figure is still far above the Bank of Canada’s target of 2%. Prior to the StatsCan report, market watchers were speculating the bank would announce an increase of .5% or .75%, as it aggressively tackles inflation..The bank will increase its rate, but it is unlikely to be lower than .5%, with a .75% hike most likely..The bank’s rate now is 2.5% and the bank made it clear it's targeting a rate of roughly 3.25% by the end of the year or early in 2023..Another government agency, the Canada Mortgage and Housing Corporation (CMHC), released its July report on new housing starts in the country..Starts edged up in July by 1.1%, to a seasonally adjusted annual rate of 275,329 units, meaning new home builders are on pace to start that many new homes by the end of the year..The slight uptick was due to rural starts, says CMHC..“The pace of urban starts came in at 254,371 units, a decline of .8%, with single-detached urban starts falling by 2.3%, to 58,384 units and multi-unit urban starts also slipping by .3%, to 195,987 units,” said CMHC..“Rural starts came in at an estimated seasonally adjusted annual rate of 20,958 units, while the six-month moving average of the monthly seasonally adjusted annual rates rose from June’s 257,862 units to 264,426 units in July."
