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

An man from Errington died when his ATV went over an embankment on Northwest Bay Logging Road on the weekend. (File photo)
Man dies in ATV crash northwest of Nanaimo

Incident happened on Northwest Bay Logging Road on Saturday afternoon

Volunteers plant trees earlier this month as part of a City of Nanaimo initiative. (City of Nanaimo photo)
City holds ‘relay’ to plant 600 trees and shrubs in Nanaimo

Trees were planted along Chase River and at Third Street Park

Vancouver Island University organizations are raising awareness about gender-based violence during 16 Days of Activism, which includes the Red Dress Project hosted by VIUSU that aims to honour the memory of Canada’s missing and murdered indigenous women and girls. (Vancouver Island University photo)
City proclamation calls on Nanaimo to unite to end violence against women

16 Days of Activism campaign started Nov. 25, continues to Dec. 10

The Nanaimo Rona location. (News Bulletin photo)
Rona home improvement store in Nanaimo advises customers that worker has COVID-19

Store re-opened Sunday after being closed for cleaning Saturday

Environment Canada has issued a special weather statement forecasting windy weather Sunday and Monday. (News Bulletin file photo)
More windy weather on the way for Vancouver Island

Environment Canada issues special weather statement for Victoria, east coast of Island, north Island

A bus shelter in White Rock is emblazoned with an ad from B.C.’s Office of the Human Rights Commissioner on Sunday, Nov. 29, 2020. (Black Press Media files)
VIDEO: ‘Am I racist?’ campaign asks British Columbians to confront their unconscious biases

Signs asking British Columbians to think about racial injustice have been put up across the province

Jim Neufeld, 55, was last seen leaving his home in Penticton Jan. 21, 2009. (RCMP photo)
Human remains found off U.S. coast in 2009 identified as Penticton man

Jim Neufeld, 55, was last seen leaving his home in Penticton Jan. 21, 2009

Remains of the scene off Melrose Road in Whiskey Creek where three bodies were found on Nov. 1, 2020. (Mandy Moraes photo)
Probe continues into grisly mid-Island discovery of 3 human bodies, 4 dead dogs

Police still want to speak with motorist who picked up hitchhikers near scene on Nov. 1

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: Help make children’s wishes come true

Black Press Media, BraveFace host mask fundraiser for Make-A-Wish Foundation

Mary Ellen Turpel-Lafond speaks to a reporter in Vancouver on November 13, 2015. (THE CANADIAN PRESS/Darryl Dyck)
No evidence that B.C. ER staff played blood alcohol level game, but Indigenous racism widespread

Mary Ellen Turpel-Lafond releases findings of independent investigation

The Nov. 20 WestJet flight 3171 has been identified by the BC Centre for Disease Control with a COVID case aboard. (Black Press file photo)
Fifth COVID-19 exposure reported on flight at Comox airport

Another exposure risk from flight originating in Calgary

B.C. Finance Minister Carole James and Premier John Horgan announce $5 billion emergency fund for COVID-19 unemployment and other relief, B.C. legislature, March 23, 2020. (B.C. government)
Carole James stays on to advise B.C. Premier John Horgan

Retired finance minister to earn a dollar a year

NDP Leader John Horgan, left, speaks as local candidate Ravi Kahlon listens during a campaign stop at Kahlon’s home in North Delta, B.C., on April 18, 2017. THE CANADIAN PRESS/Darryl Dyck
Janice Perrino, Nanaimo and District Hospital Foundation CEO, holds information brochures for the Light the Trees campaign, part of an effort to raise $5 million for the new intensive care unit at Nanaimo Regional General Hospital. (Chris Bush/News Bulletin)
Million-dollar donation has Light the Trees campaign off to a bright start in Nanaimo

Windsor Plywood Foundation supports Nanaimo and District Hospital Foundation

Most Read