RTTNews - Canadian inflation sagged to its lowest level in more than 50 years in July, as prices at the pump continued to fall. However, excluding volatile energy prices, consumer prices rose a relatively robust 1.8% annually, soothing concerns about overall deflation.

Consumer prices fell 0.9% in July 2009 compared with July 2008, following a 0.3% decrease in June. The decrease was due primarily to a 12-month decline of 23.4% in prices for energy products, particularly gasoline.

The all-items Consumer Price Index (CPI) excluding energy rose 1.8% in the 12 months to July. Nationally, gasoline prices fell 28.3% between July 2008 and July 2009, following a 12-month decline of 24.3% in June.

Of the eight major components in the CPI, three recorded declines in the 12 months to July: transportation; shelter; and clothing and footwear. The most significant downward contributor was transportation, which includes lower prices for both gasoline and purchasing passenger vehicles.

In the shelter component, prices fell for natural gas, fuel oil and other fuels and homeowner's replacement costs, continuing a downward trend.

The primary upward pressure on consumer prices came from food, which increased 5.0% between July 2008 and July 2009.

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