08/17/2012 10:01 EDT | Updated 10/17/2012 05:12 EDT

Inflation rate cools to 1.3%

Canada's consumer price index grew at a slower rate in July, as prices ticked higher in almost every province and every component group that Statistics Canada watches.

Prices were 1.3 per cent higher in July than they were a year earlier. That was less than the 1.5 per cent annual pace seen a month earlier, and less than the 1.6 per cent rate that economists had been expecting.

On a monthly basis, prices actually dipped by 0.1 per cent from June to July. That wasn't enough to pull the annual inflation figure into negative territory. But if prices were to continue to drop, that could amount to deflation.

Food prices rose by 2.1 per cent in the 12 months up to July, ahead of the two per cent pace of gain in June. Those two months represent the lowest year-over-year gains in food prices since the beginning of 2011.

"Food prices remain well-behaved despite talk of increases due to the U.S. drought although a move up later in the year is likely," RBC economist Dawn Desjardins said in a note following the release of the data.

In the energy sector, gasoline prices fell 1.3 per cent in the year ended in July, and natural gas prices were 15.2 per cent lower than they were a year ago. But the cost of electricity increased 3.7 per cent year-over-year, after a 5.9 per cent rise the month before

Consumer prices rose for every major component with the exception of clothing and footwear, Statistics Canada said.

And with the exception of P.E.I. and Manitoba, every province saw prices rise at a slower rate.