Skip to main content

Inflation dips, but experts wary of celebrating just yet

While Canada and Alberta's inflation rates have dropped from a record-high peak seen in June, not all consumer prices are falling with it.

While the price to gas up your vehicle may have dropped, groceries continue to be more expensive than last year, and experts say the market is so volatile it wouldn't take much to send prices back up.

Canada's year-over-year inflation rate dropped from a four-decade peak of 8.1 per cent in June to 7.6 per cent in July, while Alberta's rate dipped from 8.4 per cent in June to 7.4 per cent in July, according to ATB Economics.

"It's too early to say that this is a downward trend,“ said Rob Roach, deputy chief economist for ATB Financial. "We hope that it is, and there's some signs that it'll continue, but I think we're going to continue to see high rates of inflation for least the next few months, if not longer."

Alberta's average price at the pumps has come down from a peak of $1.90 per litre in early July to about $1.50 per litre, according to

Prices for West Texas Intermediate, the benchmark for crude oil, are down 30 per cent in two months, closing Tuesday at $86.53.

Market analysts say that factors and trends affecting the commodity markets, refineries and gasoline retailers are expected to continue downward, but conditions are highly unstable.

"The market is so fragile, demand and supply just close to each other. Given that, if everything goes normal, you can see this decrease in price going forward. But if there was a supply disruption, we will see prices come back to $100 per barrel easily. Because the market is very tight," said Vijay Muralidharan, managing director of R Cube Economic Consulting Inc.

He adds the end of the driving season in early October should also cause a further drop in gas prices.

A majority of food items are about 10 per cent more expensive than last year.

Statistics Canada has reported that eggs are nearly 16 per cent more expensive compared to July 2021, baked goods are up 13 per cent, and fresh fruits are also up 11 per cent.

Agri-food experts say it will take longer for prices to drop -- because profit margins for grocery retailers are often very slim.

"Grocers and anyone else involved in the food industry are very careful when protecting margins, and that's why you don't necessarily see prices drop. In fact, I don't believe that prices will be dropping anytime soon, because of that reality," said Sylvain Charlebois, director, agri-food analytics lab at Dalhousie University.

He says he is optimistic that slowing inflation could slowly translate to lower grocery bills.

"The fact that we're not looking at a at an increasing food inflation rating means that companies will be able to afford the time to plan for promotions and discounting," said Charlebois.

Inflation is still much higher than the Bank of Canada's target of two percent inflation.

On Tuesday the governor signalled publicly that another interest rate hike is likely to try to lower demand for borrowing and spending.

The next interest rate announcement is on Sept. 7. Top Stories

PM pans Poilievre for 'pulling stunts' by threatening to delay MPs' holidays with House tactics

Conservative Leader Pierre Poilievre is threatening to delay MPs' holidays by throwing up thousands of procedural motions seeking to block Liberal legislation until Prime Minister Justin Trudeau backs off his carbon tax. It's a move Government House Leader Karina Gould was quick to condemn, warning the Official Opposition leader's 'temper tantrum' tactics will impact Canadians.

Stay Connected