The annual rate of inflation in Canada in August increased at the slowest pace since February 2021, reported Statistics Canada on Tuesday.
The federal agency said the Consumer Price Index (CPI) rose two per cent on a year-over-year basis in August and down from a 2.5 per cent gain in July.
“The deceleration in headline inflation in August was due, in part, to lower prices for gasoline, due to a combination of lower prices and a base-year effect. Excluding gasoline, the CPI rose 2.2 per cent in August, down from 2.5 per cent in July,” it said.
“Mortgage interest cost and rent remained the largest contributors to the increase in the CPI in August. On a monthly basis, the CPI fell 0.2 per cent in August, after a 0.4 per cent increase in July. The monthly decline was led by lower prices for air transportation, gasoline, clothing and footwear and travel tours. On a seasonally adjusted monthly basis, the CPI rose 0.1 per cent in August.”
Year over year, prices at the pump fell 5.1 per cent in August following a 1.9 per cent increase in July, said StatsCan.
“This was due to a combination of a base-year effect and current events, with prices, on a month-over-month basis, rising 4.6 per cent in August 2023 and falling 2.6 per cent in August 2024, the third monthly decrease in four months. The decline in August 2024 was mainly due to lower crude oil prices amid economic concerns in the United States and slowing demand in China.”
Prices for clothing and footwear declined 0.6 per cent on a month-over-month basis in August. A drop in prices in the month of August has not been observed since 1971, as this month is typically associated with back-to-school clothes shopping, with stronger demand putting upward pressure on prices. Compared with August 2023, retailers offered more and larger discounts in August 2024 to entice consumer spending amid recent slowing demand, said the federal agency.
Year over year, clothing and footwear prices fell for an eighth consecutive month, down 4.4 per cent in August following a 2.7 per cent decline in July, it added.
“On a year-over-year basis, consumers paid 2.4 per cent more for food purchased from stores in August after a 2.1 per cent increase in July. This was the result of a base-year effect, notably coming from prices for dairy products (+3.3 per cent) and fresh fruit (+1.5 per cent). Despite this, grocery prices decreased on a month-over-month basis in August (-0.2 per cent), largely due to a seasonally typical decline in prices for fresh vegetables (-2.8 per cent).”
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