The Consumer Price Index edged up 3.3% annually in July, as mortgage costs soared for a fifth straight month.
, the "real test" will come in 2025 and 2026, when the five-year terms initiated in 2020 and 2021, when interest rates were up to 4.75% lower, mature.
The acceleration in headline CPI, though, was largely attributable to a base-year effect on gas prices. Although they rose just 0.9% on a monthly basis in July, and were down 12.9% annually, a significant monthly decline seen in July 2022 is no longer impacting the 12-month price movement, which has put upward pressure on the year-over-year figure.
The base-year effect, which refers to the impact that price movements from a year ago have on the current month’s calculation, also had an impact on electricity prices, which rose 11.7% annually in July compared to a 5.8% jump in June. The rise was largely due to a 127.8% increase in electricity prices in Alberta; policy interventions that were introduced in July 2022 — and led to a 24.4% monthly price reduction at the time — have ended, and last year’s price drop has fallen out of the 12-month calculation. Similarly, natural gas prices fell 15.7% in July, up from the 5.8% decline in June. The drop was mainly attributable to a base-year effect in Ontario, where prices rose 22.6% on a monthly basis.
The deceleration was driven by the price of fresh fruit, which rose 4.1% annually in July compared to a 10.4% increase in June. Prices fell 6.5% on a monthly basis, the largest decline since February 2008, as the cost of grapes fell 40.9% and the price of oranges dipped 1.8%.
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