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Food joins gas prices as key driver of inflation as consumer prices rise 2.4%

OTTAWA - Statistics Canada says annual inflation continues to rise, hitting a new two-year high of 2.4 per cent in June.

The one-tenth increase in the so-called headline inflation was matched by an identical gain in the core reading which the Bank of Canada watches closely to 1.8 per cent, very near the central bank's two per cent target.

The agency says the gains were broadbased with all major components recording increases, although the 5.4 per cent rise in gas prices was lower than May's 6.3 per cent annualized gain.

As well, food prices increased by 2.9 per cent and food purchases in stores increased by 3.2 per cent over last year as consumers paid 9.4 per cent more for meat and 9.5 per cent more for fresh vegetables.

Government taxes on tobacco continued to exert an influence on the price of cigarettes, which are now 10.3 per cent higher than last year at this time.

Bank of Canada governor Stephen Poloz said earlier this week that he was still convinced that the current bump in inflation is temporary and that prices will begin to moderate later this year.

The Canadian Press

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