Hotter summer prices
The inflation rate in both Alberta and Canada increased in August
By Mark Parsons, ATB Economics 20 September 2023 1 min read
Canada’s annual inflation rate accelerated to 4.0% last month (vs. 3.3% in July), fueled by gasoline prices. While an uptick was expected, the reading still came in 0.2 points higher than the consensus estimate.
The Bank of Canada has been focused on ‘core’ inflation readings that strip out the impacts of more volatile items. Two of the measures (trim and median) went in the wrong direction, nudging up on a year over year basis to around 4%.
Mortgage costs continued to add to inflation, rising 30.9% year-over-year.
On a more positive note, food inflation eased to the lowest it has been since February 2022 (albeit still high at 6.8%).
In Alberta, higher energy prices pushed inflation from 2.9% to 4.3%—its first move above the national average since June 2022 (see chart). Gasoline added to Alberta’s inflation rate, along with a much smaller decline in natural gas prices. For the second straight month, electricity prices more than doubled year-over-year, reflecting strong demand and the impact of rebates lowering prices in August 2022. Excluding energy prices, annual inflation was a milder 3.5%, down from 3.8% in July. Outside the energy basket, there was a notable increase in prices for rented accommodation while food inflation eased.
So far this year, Alberta’s annual inflation rate has averaged 3.5% compared to 4.2% nationally.
The Bank of Canada has repeated its resolve to get inflation back to 2%, and this latest report provides little comfort. However, it will be considered alongside other data points, including another inflation reading and jobs report before the October announcement. The Bank will also weigh the uptick in inflation against signs that past rate hikes are cooling the economy, which is expected to translate into weaker inflationary pressures. While risks of another hike have increased, we lean towards the Bank remaining on the sidelines next month.
Answer to the previous trivia question: Alberta’s population surpassed the combined population of Saskatchewan and Manitoba in 1978.
Today’s trivia question: A Wayne Gretzkey rookie card from 1979 holds the record for the most expensive hockey card. How much did it sell for in 2021?