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Cheaper energy pulls Canada’s inflation rate down to 2% in June
Oil pumps in operation at an oilfield near central Los Angeles on February 02, 2011. World oil prices recently rallied close to $100 per barrel, as traders absorbed impressive fourth-quarter US economic growth and fretted over worsening political turmoil in Egypt. Most other commodity markets also won support this week from news that the US economic recovery picked up speed in the last three months of 2010, stoking hopes of strengthening demand for raw materials. The US economy grew at its fastest clip in five years in 2010, the Commerce Department reported, as the country bounced back from recession and fears of a double-dip recession ebbed. AFP PHOTO/Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)

Cheaper energy pulls Canada’s inflation rate down to 2% in June

Canada’s consumer price index rose at a two per cent annual pace in June, as the price of just about everything except energy went up.

Statistics Canada reported Wednesday that prices for food, shelter, clothing, home furnishings, services, insurance, new cars, to name a few, have risen in the past year. But the overall inflation rate fell to two per cent in June from 2.4 per cent the previous month, mainly because of a precipitous drop in energy prices compared with this time last year.

Across Canada, gasoline prices have fallen by 9.1 per cent over the past 12 months, but the price of fuel oil and other fuels has also fallen, by 4.1 per cent over that same period. Natural gas and electricity prices rose a little, but they were offset by much cheaper prices for every other type of energy.

Part of the reason for cheaper energy is rising inventories in the U.S. are driving down prices, but also, Alberta’s scrapping of its carbon tax at the end of May helped cause a one-time drop in energy prices on a year-to-year basis.

Energy prices have fallen in every province, from a big drop of 12.7 per cent in Alberta to 3.6 per cent in Ontario, over the past 12 months.