The Consumer Price Index (CPI) rose 3.3% year over year in July, following a 2.8% increase in June. Acceleration in headline consumer inflation was mainly attributable to a base-year effect in gasoline prices, as a large monthly decline in July 2022 (-9.2%) is no longer impacting the 12-month movement. Excluding gasoline, the CPI rose 4.1%, edging up from 4.0% in June.
Electricity prices rose significantly in Alberta, increasing by 127.8% in July on a year-over-year basis. Excluding energy, the CPI decelerated to 4.2% after a 4.4% increase in June.
The mortgage interest cost index (+30.6%) posted another record year-over-year gain and remained the largest contributor to headline inflation. The all-items excluding mortgage interest cost index rose 2.4% in July.
On a monthly basis, the CPI rose 0.6% in July, following a 0.1% gain in June, largely a result of higher monthly prices for travel tours, with July being a peak travel month. On a seasonally adjusted monthly basis, the CPI rose 0.5%.
Chart 1
12-month change in the Consumer Price Index (CPI) and CPI excluding energy
Chart 2
Accelerating price growth in five of seven special aggregates
Chart 3
Gasoline prices lead smaller decline in the transportation component
Energy products have a smaller decline in July
On a year-over-year basis, energy prices fell less in July (-8.2%) compared with June (-14.6%).
Prices for gasoline fell 12.9% year over year in July after a 21.6% decline in June. This was the result of a base-year effect, with prices remaining nearly unchanged on a month-over-month basis in July 2023 (+0.9%) compared with a 9.2% monthly decline in July 2022, when there were concerns of a slowing global economy.
Electricity prices rose at a faster pace year over year in July 2023 (+11.7%) than in June (+5.8%). This acceleration was mostly due to a 127.8% increase in Albertan electricity prices, which can be volatile, amid high summer demand. In the early months of the year, when demand was last this high, provincial rebates and a price cap kept prices lower for consumers. These policy interventions were gradually phased out and ended in spring 2023. A base-year effect also contributed to the increase. When the provincial rebate program was introduced in July 2022, prices fell 24.4% month over month. This decrease is no longer impacting the 12-month movement, putting upward pressure on the year-over-year figure.
Conversely, on a year-over-year basis, natural gas prices fell 15.7% in July 2023, compared with a 5.8% decline in June. This was mainly due to a base-year effect in Ontario, where natural gas prices rose 22.6% month over month in July 2022, following rate increases amid sustained global demand for natural gas.
Chart 4
Smaller price declines for most energy products
Prices for travel-related services slow or decline compared with July 2022
Prices for travel-related services slowed or declined compared with July 2022. Last summer, most public health measures put in place to combat COVID-19 had been removed, and demand for travel-related services increased compared with the pandemic period.
Traveller accommodation prices increased 4.2% in July on a year-over-year basis, compared with a 12.9% gain in June. Prices for travel tours declined by 1.2% in July, after increasing by 6.8% in June. In addition, airfares were down by 12.7% compared with last July, after falling by 3.5% in June.
Chart 5
Year-over-year movements in travel-related services
Lower year-over-year growth in grocery prices
While prices for groceries remained elevated, they grew at a slower pace year over year, rising 8.5% in July after a 9.1% increase in June. Slower price growth was due mainly to prices for fresh fruit and, to a lesser extent, bakery products.
Prices for fresh fruit rose 4.1% in July, following a 10.4% increase in June. The deceleration was driven by the largest month-over-month decline (-6.5%) since February 2008. This decline was largely a result of lower monthly prices for grapes (-40.9%) and oranges (-1.8%).
Bakery products cost 9.8% more year over year in July, following a 12.9% increase in June.
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Regional highlights
Year over year, prices rose at a faster pace in July compared with June in eight provinces. Price growth accelerated the most in Prince Edward Island, largely due to acceleration in prices for energy products.
Chart 6
The Consumer Price Index rises at a faster pace in eight provinces
Consumers in Nova Scotia see gas prices rise at the fastest monthly pace in Canada
Nova Scotians saw prices at the pump increase by 14.0% in July compared with June. The introduction of the federal carbon levy in the province and higher wholesale prices contributed to higher gasoline prices.
