Canada’s annual inflation rate in July remained at
2.2% for the fourth month in a row, Statistics Canada said today.

Much of the year-over-year rise in the consumer price index was due to higher accommodation costs, as housing prices and mortgage rates increased.

Lower prices for gasoline and natural gas mitigated the annual rise in the cost of living, StatsCan said.

The core rate of inflation — which excludes the more volatile items like gasoline and tobacco — moderated to 2.3% from 2.5% in June. That was in line with analysts’ forecasts.

The core rate is still higher than the Bank of Canada’s 2% target rate. But it is moderating, and analysts say that will give the central bank room to leave its key lending rate unchanged at its next policy meeting on Sept. 5.

“This benign result is clearly good news for the Bank of Canada, and will give them greater comfort as they wait on the sidelines at the Sept. 5 decision date,” said BMO Capital Markets economist Doug Porter in a morning commentary.

Alberta again led all provinces with an annual inflation rate of 5%. But that was a marked slowdown from the 6.3% rate in June, as the rate of increase in Alberta’s soaring home prices eased.

Consumer prices edged up by just 0.1% between June and July, StatsCan said. Higher prices for women’s clothing, hotel and motel rates, and higher mortgage rates provided the upward pressure on the CPI, while lower prices for cars, natural gas and fresh vegetables provided some downside relief.