Sub-zero inflation tied to fuel

Canada is expected to experience an economic oddity Friday that few thought possible before the world was turned upside down a year ago — annual inflation below zero.

OTTAWA — Canada is expected to experience an economic oddity Friday that few thought possible before the world was turned upside down a year ago — annual inflation below zero.

When Statistics Canada releases new data on what happened to June prices Friday morning, most economists are convinced the annual rate will fall to a negative 0.3 per cent — from being just on the positive side of the line in May.

Even stranger is that inflation is going negative when most Canadians would swear they are paying more. The monthly index has been inching mostly up and will continue to do so.

But Canadians are likely to have forgotten the pain of having to pay about $1.40 a litre to fill up their vehicles last June and part of July as oil prices were spiking.

“This is more of a story of how high gasoline prices were a year ago than how low prices are today,” said CIBC chief economist Avery Shenfeld. “This June’s gasoline price generates such a large saving from a year ago that it swamps inflation and everything else.”

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