It used to be one of the most dreaded and hated economic indicators around. But these days, overall consumer price inflation is little more than a whimper—even if shoppers are seeing some sticker shock in the grocery stores.
Yesterday, Statistics Canada reported that inflation as measured by the Consumer Price Index (CPI) rose by a mere 1.0 per cent in Alberta—tied with British Columbia and New Brunswick for the lowest in the land.
Nationally, consumer prices rose 1.2 per cent from August of last year, following a 1.3 per cent annual gain in July. Higher prices for the purchase of passenger vehicles, gasoline, meat and food purchased from restaurants were major factors in the year-over-year increase of the August number.
Core inflation—a special measure used by the Bank of Canada that removes eight of the most volatile categories of items from the basket of consumer goods—was not much stronger. It rose by 1.6 per cent year over year. The Bank of Canada targets a core rate of inflation of 2.0 per cent.
Following some of the price trends in the rest of the country, shoppers in Alberta paid more in August for fresh fruit (+7.1 per cent), meat (+5.6 per cent) and alcoholic beverages (+3.7 per cent). On the other hand, steep price deflation drove prices lower for natural gas, which fell 22.7 per cent. Prices also fell for electricity (-3.2 per cent) and men’s clothing (-2.5 per cent).
The very weak CPI report in August will confirm for the Bank of Canada that it is correct in holding interest rates unchanged. With barely a whiff of consumer price inflation and rates continuing to be held at record lows in the U.S., interest rates on this side of the border will probably stay low for quite some time to come.*
*by Todd Hirsch,ATB Senior Economist