Inflation slows for another month but not enough to stop interest rate increases.
Year over year inflation is down for a second consecutive month. Inflation excluding gasoline is also down for the first time since June 2021. However, it is still too early for the Bank of Canada to stop interest rate increases.
While inflation continues to drop, it is still far from the Bank of Canada’s target of 2%.
Year over year inflation
The Bank of Canada has also explicitly mentioned that their preferred measures of core inflation were all at or above 5% in July, which was one of the reasons for the 0.75% increase. While they have gone down in August, it has only started to move.
| CPI | May 2022 | June 2022 | July 2022 | August 2022 |
|---|---|---|---|---|
| CPI-Common | 5.6% | 5.8% | 6.0% | 5.7% |
| CPI-Median | 4.9% | 4.9% | 4.9% | 4.8% |
| CPI-Trim | 5.4% | 5.5% | 5.4% | 5.2% |
What we can expect is for the Bank of Canada to pause and assess for a couple of months to see how things shake out in the economy.
