Inflation edges higher in July, Alberta's energy prices major factor: Stats Canada

Canada's annual inflation rate crept up to 3.3 per cent in July, pushed higher in part by high energy prices.

Across Canada, electricity was up 11.7 per cent last month. In Alberta that was a staggering 127.8 per cent.

A record-setting increase was also made by mortgage costs, up 30.6 per cent in July compared to the previous year.

The volatile prices highlight one of the major challenges for the Bank of Canada, which now has to how get inflation within the target range of between one and three per cent without triggering a recession or letting the problem get worse.

"So they’re kind of looking past the headline, monthly swings which have mostly been energy related," said Mark Parsons, chief economist with ATB Financial. "In that department, there has been some good news – core inflation came down a little bit, but not that much.”

"Getting from three to two per cent is going to be the tricky part for the bank of Canada. Some of their underlying core inflation readings are still suggesting that the inflation pressures are still above three per cent,” Parsons says.

Alberta's inflation rate was 2.9 per cent in July, beating the country as a whole, but still up a full percentage point from June.

Despite the continued rise in mortgage costs, the number of arrears has remained largely stable.

Mortgage broker Keith Uthe of Mortgage Alliance and Enrich Mortgage Group says that's due largely to stricter affordability requirements put in place by the federal government in 2016.

Uthe says people renewing mortgages from 2018 are now mostly within a quarter point of what they first qualified for, as long as those homes didn't stack on other consumer debt or lose their income, they're likely doing fine.

"People’s mental state having seen interest rates the way they were during COVID for over two years… that is not the norm, that’s a blip in the calendar of mortgage rates."