Inflation rates in B.C. and Canada embarked on divergent paths last month.
Inflation on the West Coast cooled to three per cent in July compared with 3.5 per cent in June, according to Statistics Canada data released Tuesday.
But the rate of inflation expanded to 3.3 per cent nationwide in July compared with 2.8 per cent in June, when the national inflation rate eased off the gas pedal more than expected.
“There's no sense sugar coating this one – it is not a good report for the Bank of Canada,” BMO chief economist Douglas Porter said in a note, referring to the national numbers.
He’s forecasting the August reading will be even higher than July, putting pressure on the Bank of Canada to hike its key rate in September. It most recently hiked its key rate last month.
Mortgage rates posted record gains, according to Tuesday’s report from Statistics Canada. A hike in the key rate would mean even higher mortgage rates putting pressure on homeowners throughout the second half of 2023.
There was some relief in the grocery aisles, though.
Prices for groceries grew 8.5 per cent in July after a 9.1 per cent increase in June.
Prices at the pumps also offered some relief to consumers, falling by 12.9 per cent annually in July after falling 21.6 per cent annually in June.
“The [Bank of Canada] is clearly willing to hike interest rates further if needed. But more signs are starting to point to a weaker economy,” RBC economist Claire Fan said in a note, pointing to lower output growth and a rising unemployment rate on the national level.
“We look for a softening economy to ease inflation pressures further going forward and expect the odds are still tilted towards the Bank of Canada foregoing another increase in the overnight rate in September.”