- Jack Spitz, managing director of foreign exchange at National Bank of Canada
Canada's annual inflation accelerated in June as food and shelter costs rose, while energy provided less of a drag. The Canadian consumer prices rose 1.0% in the reported month from a year earlier, compared with May's reading of 0.9%, according to Statistics Canada. At the same time, Canada's core inflation rate, which strips out volatile items such as food and energy, climbed 2.3%, slightly beating expectations for a 2.2% gain. June marked the 11th straight month in which the measure stood at 2% or higher. On a month-over-month basis, the consumer price index climbed 0.2%, whereas core inflation remained flat. Consumer prices were up in seven of the eight major sectors that Statistics Canada tracks, led by a rise in the cost of food, which increased 3.4% from a year earlier. The price of meat surged 6.6% on a 12-month basis in June. The cost of household operations, furnishings and equipment climbed 3.1% from a year earlier.
Bank of Canada policy makers cut interest rates last week by 25 basis points to 0.50%, saying a weak economy threatened to keep inflation from returning to its 2% target. The central bank said underlying inflation is hovering in the 1.5% to 1.7% range. The Canadian Dollar declined to the lowest since 2009 on speculation price gains are not enough to eliminate the chance of another central-bank rate cut.
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