Statistics Canada reported on Wednesday the country’s consumer price index (CPI) edged down 0.1 percent m-o-m in July, following a 0.8 percent m-o-m gain in the previous month.

On the y-o-y basis, Canada’s inflation rate increased 0.1 percent last month after climbing 0.7 percent in June.

Economists had predicted inflation would increase 0.4 percent m-o-m and 0.5 percent y-o-y in July.

According to the report, prices rose in five of the eight major components on a year-over-year basis in July, but mostly at a slower pace than in June. Meanwhile, the cost of transport dropped (-1.0 percent y-o-y), mainly due to lower air transportation prices (-8.6 percent y-o-y), which fell for the first time on a year-over-year basis since December 2015, as airlines were offering various incentives such as reduced fees, discounts and promotions to encourage a return to travel following restrictions due to the COVID-19 pandemic. In addition, prices declined in clothing and footwear (-2.0 percent y-o-y) and recreation, education and reading (-4.0 percent y-o-y).

The closely watched the Bank of Canada's core index rose 0.7 percent y-o-y in July after a 1.1 percent gain in June.