Statistics Canada to release June inflation data this morning

Canada’s annual inflation rate fell to 2.7 per cent in June, with Statistics Canada largely attributing the deceleration to slower year-over-year growth in gasoline prices.

The agency reported Tuesday that gasoline prices rose 0.4 per cent in June following a 5.6 per cent jump in May. Excluding gasoline, the consumer price index rose 2.8 per cent in June.

The annual inflation rate for May was 2.9 per cent.

StatCan said lower prices for durable goods also contributed to the overall slowdown in June, falling 1.8 per cent year-over-year in the month following a 0.8 per cent decline in May.

Meanwhile, grocery prices rose 2.1 per cent year-over-year in June, up from May when they increased 1.5 per cent from the same month a year earlier.

It marked the second consecutive month that the pace of growth in grocery prices accelerated.

Fresh vegetables saw a 3.8 per cent gain and dairy product prices grew two per cent. The price of preserved fruit and fruit preparations grew 9.5 per cent, while non-alcoholic beverage costs rose 5.6 per cent.

Fresh fruit prices helped moderate the increase in overall grocery prices, falling 5.2 per cent in June compared with a 2.8 per cent drop in May.

The June inflation reading is the last before the Bank of Canada’s next interest rate decision, set for July 24.The central bank, which targets an annual inflation rate of two per cent, cut its benchmark interest rate by a quarter of a percentage point earlier this month to 4.75 per cent.

CIBC senior economist Katherine Judge said the June inflation data “gave the Bank of Canada what it needed in order to cut interest rates at next week’s meeting.”

She said that core inflation, which excludes food and energy prices that tend to be more volatile, ticked up 0.2 per cent on a seasonally adjusted basis, down from last month’s 0.3 per cent gain.

“This shows that the prior month’s upside surprise in inflation was just a blip in a broader trend of disinflation as demand in the economy remains under pressure,” Judge said in a note.

This report by The Canadian Press was first published July 16, 2024.

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