Canadian Inflation (July 2020)

Change in CPI - July 2020Canadian inflation, as measured by the Consumer Price Index (CPI) rose by 0.1% in July year-over-year, down from a 0.7% rise in the previous month. Excluding gasoline, the CPI rose by 0.7%. Inflation grew at a slower pace than in June due to a broad-based slowdown in price growth. Prices rose in five of eight components year-over-year, while prices fell for air transportation (-8.6%) and accommodations (-27%). This is the first year-over-year price decline in the transportation component since December 2015. Meanwhile, the Bank of Canada's three measures of trend inflation fell by 0.1 percentage points, averaging 1.6% in July.

Regionally, the CPI was positive in five provinces. In BC, CPI rose by 0.2% year-over-year, following a 0.5% rise in June. Prices for food, alcohol/tobacco/cannabis, and health and personal care continued to rise in July, while downward pressure on gas prices eased up as people were using their vechicles more.

The impact of COVID-19 on some of the hard hit components are beginning to dissipate, excluding the transportation and accommodation sectors, which usually see a rise in the summer months. The path of inflation going forward will be a constant tension between various incentives such as reduced fees, discounts and promotions, against lower revenues due to physical distancing measures.

12 Month Change in CPI
Change in CPI by Component in BC