In June, Canada’s inflation rate reached 8.1 % as gasoline prices rose.
The annual inflation rate in Canada accelerated to 8.1 % in June, missing forecasts but remaining at its highest level since January 1983, according to Statistics Canada data released on Wednesday.
Analysts expected annual inflation to reach 8.4 % in June, up from 7.7 % in May. The Bank of Canada forecasted last week that inflation would remain around 8% for the foreseeable future.
“The acceleration in June was mainly due to higher prices for gasoline, however, price increases remained broad-based with seven of eight major components rising by 3% or more,” Statscan said.
On a month-over-month basis, the index rose 0.7% in June, missing forecasts of 0.9% and down from 1.4% in May.
Canada’s inflation rate has been above the Bank of Canada’s 2% target since March 2021. The central bank last week surprised with a rare 100-basis-point rate increase in a bid to crush inflation and fend off the risk of a price spiral.
Gasoline prices were up 54.6% in June on a year-over-year basis, compared with 48.0% gain in May. High gasoline prices account for about a quarter of total price gains from a year-ago.
Statistics Canada on Monthly Credit Aggregates, May 2022, Canada Economics
Household mortgage debt increased 0.9 % to $2,021.5 billion in May, up $17.4 billion from April, according to Statistics Canada, which noted that the primary contributors were increased mortgage debt with chartered banks (+$14.4 billion) and credit unions (+$2.3 billion). Seasonally adjusted, household mortgage debt increased by 0.8 % in May, slightly higher than the 0.7 % increases seen in the previous two months.
StatsCan noted the volume of existing home sales decreased by 2.0% in May, a smaller drop compared with the 13.9% decrease recorded in the previous month. Furthermore, the average sales price fell in May to roughly $707,000, marking the third consecutive monthly decline. However, the New Housing Price Index recorded growth in new home prices for Canada in May (+0.5%) and April (+0.3%). This was coupled with a string of seven consecutive monthly increases in investment in building construction (seasonally adjusted with current dollar values), which ended in April. By May, construction activity had edged down 0.2% as labour strikes delayed projects in Ontario. The policy interest rate remained at 1.0% throughout May, after increasing by 50 basis points in April.
Non-mortgage loan debt increased by $6.4 billion (+0.9%) in May to reach $712.4 billion. The main contributors to this rise were credit card debt and home equity lines of credit with chartered banks. Credit card debt with banks rose $2.4 billion (+2.9%) in May, a fourth consecutive monthly increase. Meanwhile, an advance estimate of retail sales suggested that sales increased 1.6% in May, following a 0.9% increase in April. On a seasonally adjusted basis, credit card balances recorded in May had nearly returned to the levels recorded at the end of 2019. Home equity lines of credit grew by $2.3 billion (+1.4%) to reach $171.2 billion in May 2022.
Overall, the total credit liabilities of households was $2,733.8 billion in May, up 0.9% (+$23.8 billion) from April. On a seasonally adjusted basis, total credit liabilities increased by 0.7% in May, a slight growth from the previous month. Real estate secured debt, composed of both mortgage debt and home equity lines of credit, rose by 0.9% (+$19.7 billion) to reach $2,192.6 billion.
Source: XglobalMarkets
