(Ottawa) Food prices continue to rise at a much faster pace than headline inflation, despite some moderation in July.
Grocery prices rose 8.5% in July from a year ago, less momentum than June’s 9.1% year-on-year gain, prices for fresh fruit and bakery growing at a slower rate.
However, the 8.5% rate is still well above headline inflation of 3.3%, which has fallen significantly from a peak of over 8% last year.
Food inflation is expected to continue to moderate in the coming months as lower commodity prices and easing supply chain pressures trickle down to retail goods, said RBC economist Claire Fan in a note.
Some forecasters say the latest inflation report has raised the prospect of an interest rate hike next month from the Bank of Canada.
A hike is not completely ruled out, but there is more economic data to come before the central bank makes its decision, Marwa Abdou, senior director of research at the Canadian Chamber of Commerce, said in a statement. .
“Much of the downward momentum we’ve seen in recent months has been exaggerated progress from the spike in gasoline prices a year ago,” Abdou said.
“While these effects have now peaked and higher grocery bills, mortgage interest rates and energy prices remain a sore point for Canadian consumers, we now have the chance to focus on the real work that remains to be done. ยป
But other experts say amid continued signs of a weakening economy, the central bank is expected to hold rates at its next meeting.
“We believe the slowing economy will further ease inflationary pressures going forward and the odds of the Bank of Canada waiving a further increase in the overnight lending interest rate in September are still good,” Ms. Fan concluded.
