The Consumer Price Index (CPI) increased by 2.5% year-over-year in July, marking the slowest rise since March 2021 and down from 2.7% in June 2024. Monthly, the CPI rose 0.4% in July after a 0.1% decrease in June. Seasonally adjusted, the CPI increased by 0.3% in July.
This slowdown in inflation was broad-based, driven mainly by lower prices for travel tours, passenger vehicles, and electricity.
Travel tours saw a 2.8% year-over-year price drop in July, following a 7.4% rise in June. Similarly, traveller accommodations (-3.7%) and air transportation (-2.7%) also saw year-over-year declines in July. Passenger vehicle prices decreased by 1.4% year-over-year in July, following a 0.4% drop in June. Electricity prices fell by 0.8% in July after a 2.4% gain in June, mainly due to a base-year effect in Alberta, where prices had spiked by 28.1% in July 2023.
Regional highlights
Year-over-year price growth slowed in July compared to June in five provinces, with the largest slowdowns in Prince Edward Island and Nova Scotia, mainly due to falling gasoline and fuel oil prices.
Shelter Prices See Slower Growth
Of note, shelter prices rose by 5.7% year-over-year in July, down from 6.2% in June, with declines in electricity, mortgage interest costs, rent, and fuel oil prices contributing to the slowdown.
Mortgage Interest Cost Index
The mortgage interest cost index also slowed, increasing by 21.0% in July compared to 22.3% in June.
Rent prices continued to rise year-over-year but at a slower rate (+8.5% in July compared to +8.8% in June), with the largest slowdowns in Prince Edward Island (+1.7%), Alberta (+12.1%), and New Brunswick (+10.5%).
The mortgage interest cost index, which measures the year-over-year change in the interest expenses on mortgages, rose by 21.0% in July, slightly down from the 22.3% increase in June, for a slight easing of the upward pressure on mortgage costs.
Some mortgage experts anticipate that variable mortgage rates may decrease next month. If the BoC lowers its trend-setting Overnight Lending Rate by another 0.25%, Canada’s prime rate could drop to 6.45%, leading to lower variable mortgage rates.
For those with variable-rate mortgages, this would either reduce their monthly payments or decrease the portion of their payments allocated to interest.
More details on the Consumer Price Index for July can be found on Statistics Canada’s The Daily website.