Canadian consumer prices drop in July

Consumer prices fell 0.9% in July 2009 compared with July 2008, following a 0.3% decrease in June. The decrease was due primarily to a 12-month decline in gasoline prices.

Statistics Canada reports there was a 12-month decline of 23.4% in prices for energy products, particularly gasoline. However, the all-items Consumer Price Index (CPI), excluding energy, rose 1.8% in the 12 months to July. Nationally, gasoline prices fell 28.3% between July 2008 and July 2009, following a 12-month decline of 24.3% in June. Regular unleaded gasoline prices at self-service stations averaged 97.4 cents per litre in July 2009 compared with a record high of 136.6 cents per litre in July 2008. Three of the eight major components in the CP recorded declines in the 12 months to July. The three are transportation; shelter; and clothing and footwear. Transportation was the most significant downward contributor was transportation. Transportation includes lower prices for both gasoline and purchasing passenger vehicles. Prices fell for natural gas, with fuel oil and other fuels and homeowner's replacement costs, continuing a downward trend. The primary upward pressure on consumer prices came from food, which increased 5.0% between July 2008 and July 2009. Bloomberg reports the annual inflation rate, excluding gasoline and seven other volatile items,decelerated to 1.8 percent from 1.9 percent in June. Economists forecast it would stay at 1.9 percent. “It’s pretty much a non-event,” said Adrienne Warren, a senior economist at Scotia Capital Inc. in Toronto. “Broader inflation is in a very comfortable zone.”