Inflation hit the Bank of Canada’s target of two per cent in August, official data show.
Prices increased at their slowest pace in more than three years, the Statistics Canada figures reveal. Inflation was 2.5 per cent in July.
In British Columbia, however, inflation was still above the national average in August, at 2.4 per cent.
That’s a 0.4 percentage-point decline on July’s rate of 2.8 per cent.
But it means BC had the highest inflation rate in Canada in August.
Speaking to NowMedia on Friday, Premier David Eby blamed the Bank of Canada for inflation in the province.
He said then: “What's driving inflation in British Columbia is housing prices and, ironically, increasing interest rates drives housing prices higher.”
StatCan said lower gas prices contributed the most to the decline in the national inflation rate.
They were 5.1 per cent lower this August compared with the previous August.
That decline was due to lower crude oil prices “amid economic concerns in the United States and slowing demand in China,” StatCan said.
Mortgage costs, meanwhile, increased 18.8 per cent year over year.
That’s a substantial decline on the August 2023 increase of 30.9 per cent.
But mortgage costs remained the biggest contributor to national price increases: without them, annual inflation would be 1.2 per cent, StatCan explained.
That appears to vindicate Eby, who told NowMedia on Friday that mortgage payment hikes had been “devastating” in BC.
“Double-digit increases, month after month after month in BC inflation around mortgage payments,” he said. “Families saying, Well, we can't afford to go for dinner now. We can't afford to buy stuff from local stores.”
StatCan also highlighted the first decline in prices for clothing and footwear in the month of August since 1971.
August, the agency explained, is “typically associated with back-to-school clothes shopping, with stronger demand putting upward pressure on prices,” but this year retailers were forced to offer discounts to entice reluctant shoppers.
On groceries, StatCan said prices were up 2.4 per cent in August compared with the previous year. Dairy products were up 3.3 per cent, while fresh fruit increased in price by an average of 1.5 per cent.
Groceries were still cheaper (-0.2 per cent) in August compared with July, however, largely due to a decline in the cost of fresh vegetables (-2.8 per cent).
The inflation rate’s decline to two per cent – the lowest level since February 2021 – is certain to put more pressure on the Bank of Canada to continue bringing down interest rates.
Its key rate was lowered to 4.25 per cent earlier this month.
The next rate announcement is due on Oct. 23.
