Canada’s inflation falls to 7.0%, driven largely by falling gas prices

Inflation fell for the second straight month in August, driven largely by falling gas prices. But the price we paid for groceries rose by the highest amount in over four decades.

Statistics Canada announced Tuesday morning that the Consumer Price Index rose by 7.0 per cent in August, compared to a year earlier. That’s down from 7.6 per cent in July, and lower than the 7.2 per cent most economists had expected. In June, inflation had jumped to a 39-year high of 8.1 per cent.

But while the main “headline” number dropped, food prices kept on soaring, with Canadians paying 10.9 per cent more than they did a year earlier. That’s the highest annual food inflation rate since August, 1981.

While gasoline prices were 22.1 per cent higher than a year ago, they dropped 9.6 per cent since July.

In the U.S., inflation fell to 8.3 per cent in August, the U.S. Bureau of Labor Statistics reported last week. While that’s lower than the 8.5 per cent in July and June’s eye-popping 9.1 per cent, most analysts had expected the rate to fall faster.