Inflation cools to 1.7% in July thanks to lower gas prices: StatCan

Inflation cooled in July thanks largely to relief at the gas pumps, but Statistics Canada said grocery and shelter costs were accelerating last month.

The annual rate of inflation fell to 1.7 per cent in July, the agency said Tuesday, down from 1.9 per cent in June. The reading was a tenth of a percentage point below most economists' expectations.

A 16.1 per cent decline year-over-year in gas prices tied mainly to the removal of the consumer carbon price earlier this year fuelled the drop.

Gas prices were also down 0.7 per cent on a monthly basis. Statistics Canada pointed to increased production from oil-exporting countries, as well as a ceasefire in the conflict between Israel and Iran, as driving down global crude oil prices.

Beyond the gas pumps, there were signs of prices accelerating at the grocery store and in housing.

Inflation on food from the grocery store accelerated to 3.4 per cent annually in July, up from 2.8 per cent in June.

Confectionary prices rose 11.8 per cent per cent and coffee gained 28.6 per cent to be among the biggest contributors to food inflation last month. Statistics Canada said poor growing conditions in countries that produce cocoa and coffee beans were to blame for higher costs.