Canadians are forking out more for food, according to Statistics Canada data released July 17, driving a 1.0% increase in overall inflation in the 12 months to June. The gains for the month matched the economists’ forecasts on Wall Street.

Last month, gasoline prices rose 3.4 percent after jumping 10.4 percent in May.

Compared to the same month a year ago, producer prices were down 0.7% in June, although the decrease is smaller than the 1.1% year-over-year drop seen in May. Core prices are up a mild 1.8% in the past year. Gas prices were higher by 3.4% on as seasonally adjusted basis during June. Energy prices overall were up 1.7% in June. That’s why the Federal Reserve (AKA the central banking authority in the US) aims for 2% inflation at all times – so that there is some price stability in the market.

Continuing price rises are likely to strengthen the case for an increase in USA interest rates. Higher prices of gasoline, housing and food such as eggs drove the latest advance.

Compared to the same month a year ago, consumer prices were up by 0.1% in June after coming in unchanged in May.

The Fed’s preferred inflation gauge, the price index for personal consumption expenditures, has undershot a 2% target for three years.

The report follows a decision by the Bank of Canada this week to cut its key interest rate by a quarter of a percentage point to 0.5 per cent and lower its expectations for economic growth this year. Over the past year, prices rose 0.1%, the first increase in that measure since December. Food prices were up 0.3 per cent last month, led by an increase in egg, meat and poultry prices.

The U.S. Department of Labor has been showing that some deflationary pressure may be going away.

Consequently, the NBS said all groups contributing to the Food sub-index increased at a faster pace during the reporting period, except oils and fats, potatoes, yams and tubers groups increasing at a slower pace.