July 17, 2009

First deflation for Canada since 1994

Canada posted its first deflation in June since November 1994 as consumer prices fell 0.3 percent on an annual basis, Statistics Canada reported Friday.

The decline in the Consumer Price Index was attributed to an annual decline of 19 percent in energy products, led by gasoline prices in the transportation sector, which were down 24.3 percent during the past 12 months, the agency said.

Excluding energy, the CPI rose 2.1 percent in June.

On a monthly basis, the index rose 0.3 percent from May to June, after increasing 0.2 percent from April to May, StatsCan said.

Of the eight major components in the CPI, three recorded declines in the 12 months to June -- transportation, shelter and clothing and footwear, the report said. The primary upward contributor on the CPI in June continued to come from higher food prices.