Canada’s inflation leaves negative territory, increases 0.7 percent in June - Kalkine Media

July 25, 2020 04:20 PM AEST | By Team Kalkine Media
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Summary

  • Canada’s Consumer Price Index grew 0.7 percent YoY in June, marking its return to positive territory, says Statistics Canada.
  • Prices gained in five of the eight major components over a year; rebound led by food and shelter
  • June inflation figures indicate slow economic rebound in Canadian market that was shuttered over pandemic fears in March.

Canada’s benchmark inflation measure, the Consumer Price Index (CPI), grew 0.7 percent year-over-year in June, marking its return to positive territory. The inflation had turned negative in April following the enforcement of strict containment measures to contain the coronavirus pandemic.

Data released by national agency Statistics Canada shows June CPI was up after a 0.4 percent decline in May. Prices gained in five of the eight major constituents over a year. The rebound was led by price rises in food and shelter while gasoline declined the most. Excluding gasoline, the CPI rose 1.2 per cent in June, says the statistics agency.

The change from May to June marks the fastest inflation turnaround since March 2011.

June Prices Rose in Five of Eight Major Components

Source: StatsCan

June Consumer Price Index of Major Components

 

 

 

June

2019

May

2020

June

2020

May to June 2020

June 2019 to June 2020

(2002=100)

(2002=100)

(2002=100)

Percentage change

Percentage change

All-items

136.3

136.1

137.2

0.8

0.7

Food

150.7

154.3

154.8

0.3

2.7

Shelter

144.0

145.6

146.4

0.5

1.7

Household operations, furnishings and equipment

124.1

123.6

123.7

0.1

-0.3

Clothing and footwear

94.9

91.5

92.4

1.0

-2.6

Transportation

142.7

139.7

142.8

2.2

0.1

Gasoline

174.1

132.8

146.7

10.5

-15.7

Health and personal care

127.7

128.4

128.3

-0.1

0.5

Recreation, education and reading

117.9

115.5

116.3

0.7

-1.4

Alcoholic beverages, tobacco products and recreational cannabis

171.2

172.1

172.2

0.1

0.6

Energy

 

160.3

137.0

146.2

6.7

-8.8

Goods

122.8

121.0

122.6

1.3

-0.2

Services

149.6

151.1

151.6

0.3

1.3

Source: StatsCan

Among provinces, prices rose the most in Alberta, followed by Saskatchewan and Quebec.

 

CPI Rose In 9 Provinces from May to June (%)

Source: StatsCan

Statistic Canada’s June data indicates slow economic rebound in the market that was shuttered over pandemic fears in March. As containment measures lifted, pent up customer demands contributed to the uptick in several sectors including essential items, consumer goods, rental prices, etc.

Employment levels also improved in June after three million jobs were lost between March and April amid government lockdown measures to curb the spread of the virus. Building on the 290,000 jobs created in May, employment rose by 5.8 percent, adding 952,900 more jobs in June, said the national statistics agency.

As the key Canadian indices crashed and the economy regressed to levels not witnessed since the second world war, the federal government continued injecting monetary support in the system with special pandemic-support programs and extension of wage subsidy program till year-end.

On the policy side, the Bank of Canada last week maintained its key interest rate near zero at 0.25 percent until the “two percent inflation target is sustainably achieved”. The central bank has projected annual inflation to be 0.6 per cent this year. To ease the fiscal pressures, the central bank is also gobbling up almost C$ 5 billion-worth Canadian government bonds every week through its quantitative easing tool, till economic recovery is well underway.

Bank of Canada’s revised Monetary Police Report projects the economy will attain its pre-pandemic growth levels only in 2022. It expects the real gross domestic product (GDP) to contract by 7.8 percent this year, before bouncing back by 5.1 percent in 2021 and 3.7 percent in 2022.

The pandemic has claimed 8,874 lives in Canada so far, with 112,672 people testing COVID-19 positive and 98,519 persons recovering, says official government data (as on July 25.)


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