Canada Inflation Cools to 2.8% in June on Gasoline Drop
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- Statistics Canada reported the country's annual inflation rate fell to 2.8% in June, beating the 2.9% Reuters analyst forecast and pulling back from May's 29-month high of 3.2% that had breached the Bank of Canada's 3% control range for the first time in over two years
- Gasoline prices were the largest contributor to the cooling, falling more than 10% at the pump in June, with year-over-year gasoline inflation slowing to 20.5% from 33.2% in May
- Core inflation measures eased further, with CPI-median dropping to 1.9% (from 2.1%) and CPI-trim falling to 1.8% (from 2.0%), suggesting underlying price pressures are moderating
- CPI excluding gasoline was unchanged at 2.2% on a year-over-year basis, and the monthly headline index decelerated by 0.4% against a forecast of -0.2%
- Grocery prices rose 3.9% annually in June, down from 4.3% in May, marking the 17th consecutive month that food-store inflation outpaced the all-items CPI
- The article attributes the gasoline-price drop to a U.S.-Iran memorandum of understanding to end the war, but flags that the conflict has since reignited and gasoline costs are already inching back up
Why it matters: Headline inflation dropping back below the Bank of Canada's 3% control ceiling — with core measures dipping under 2% — gives Governor Macklem breathing room ahead of his final year, but the article itself warns the gasoline-price tailwind is reversing as the U.S.-Iran ceasefire collapses, meaning July data could easily snap back higher.
