A new report says that higher costs for gasoline and air travel both helped push the annual inflation rate to its highest level since 2011.
Statistics Canada released its Consumer Price Index for July 2018 on Friday and said that the national inflation rate has gone up by three percent, following a 2.5 percent increase in June 2018.
Alberta’s annual change was recorded at 3.5 percent.
The report says that a 25.4 percent increase in the price of gasoline and a 28.2 percent increase in the cost of air transportation compared with a year ago helped push overall prices higher.
Todd Hirsch, economist with ATB Financial, says that the increase in gas prices will also affect the cost for all sorts of other goods that need to be transported.
“It’s a strong inflation report indicating that the Canadian economy is doing well, but it’s mostly those fuel prices that are trickling into the prices of everything else.”
Earlier in the summer, the Bank of Canada said that the inflation rate would jump to about 2.5 percent before it settles back down to two percent in late 2019.
“For the average Albertan, for the average Canadian, it’s going to mean fewer dollars left over for saving or spending on some of those discretionary items, those fun things in life.”
Hirsch says August could see another high inflation rate and eventually fuel prices will become much less of a draw on the figures as time goes on.
“Those inflation numbers, by the end of the year, will go back down to 1.5 or two percent because I don’t think that fuel prices are going to continue to rise by 25 percent every single month.”
He adds that the Bank of Canada could also move to increase the interest rate in the fall in response to the strong inflation report and that would mean higher borrowing costs.
(With files from the Canadian Press)
