According to the latest StatsCanada report, the consumer price index rose 7.0% year over year, down from 7.6% in July. This slowdown was largely due to a decline in gasoline prices.
Although core inflation (price change of goods and services minus food and energy) has slowed down, it sits well above the 2% inflation target. The BoC (Bank of Canada) will continue to increase rates until this target is reached.
The Aggregate Composite MLS® Home Price Index (HPI) slowly decreased to 1.6% on a month-over-month basis in August 2022, with Ontario and BC markets accounting for most of the monthly declines.
The non-seasonally adjusted Aggregate Composite MLS® HPI was up by 7.1% from a year ago in August compared to the near-30% record increase earlier this year. Since the slow decline of year over year comparisons, this was the first single-digit increase bordering on two years.
Since the recent peak in March 2022, average home prices in Canada have dropped to 11.1%, with Greater Toronto and Greater Vancouver leading with a 13.7% and 11.7% decline, respectively.
As the Canadian housing correction persists, the BoC remains aggressive with tightening monetary policy. The current policy interest rate is 3.25%. Based on predictions from economists, we can expect another increase when the BoC meets this month. The next interest rate announcement is on October 26th, 2022.
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