Key facts
- Canada's annual inflation rate decreased to 2.8% in June, below the forecasted 2.9%.
- Gasoline prices saw a significant drop of over 10% in June.
- Excluding gasoline, the Consumer Price Index was unchanged month-on-month at 2.2%.
- Core inflation measures, CPI-median and CPI-trim, continued to ease.
- Grocery price inflation slowed to 3.9% annually in June.
Canada's annual inflation rate eased to 2.8% in June, falling below economists' expectations of 2.9%, according to data released by Statistics Canada. This deceleration was primarily driven by a significant drop in gasoline prices, which fell by over 10% during the month. The Consumer Price Index (CPI) also decreased by 0.4% on a month-on-month basis.
Excluding the volatile gasoline component, the CPI remained unchanged in June compared to May, holding steady at 2.2%. This indicates that underlying inflation pressures may be more persistent. However, core inflation measures, closely watched by the Bank of Canada, showed further easing. CPI-median decreased to 1.9% from 2.1% in May, and CPI-trim fell to 1.8% from 2% in the prior month.
Other notable price changes included a 3.5% annual increase in food prices and a 3.8% rise in the recreation, education, and reading category. Grocery price inflation, while still outpacing the overall CPI, cooled slightly to 3.9% annually, down from 4.3% in May. Transportation costs, which account for about 18% of the CPI basket, rose by 6.7% on an annual basis, influenced by the gasoline price fluctuations.
Last month, Canada's inflation rate had reached a 29-month high of 3.2%, exceeding the Bank of Canada's control range. The recent cooling provides some relief, though analysts note that gasoline prices have started to inch up again in July.